What expense category is Flower and Decoration for Worship Spaces?

Creating a welcoming and inspiring environment for worship is a key part of ministry for many churches and religious organizations. The costs for flowers, candles, banners, and other decorations used to adorn the sanctuary or worship space are a common and necessary expense of conducting services.

For church administrators and treasurers, it is essential to categorize these costs correctly for accurate financial reporting and transparent stewardship of funds. The tax treatment of these items depends on their cost and useful life. This guide will clarify how to classify these expenses according to standard accounting principles and IRS rules.

Flower and Decoration Costs (for Worship Spaces) Category

For a church or religious organization, the costs of flowers and decorations for the worship space are a direct program expense, as they are directly related to carrying out the primary mission of the organization. For bookkeeping and tax reporting, these costs must be broken down based on their nature:

1. Supplies (Currently Deductible): The cost of items that are normally used within one year is a currently deductible expense. This includes consumable items like fresh flower arrangements, candles, and seasonal decorations. This is based on the principle for deducting supplies in IRS Publication 535.
2. Depreciable Assets (Capitalized): Significant, long-lasting decorations are capital assets. As explained in IRS Publication 946, these costs must be capitalized and recovered over time through depreciation. This includes items like durable liturgical banners, nativity sets, or permanent fixtures.

Important Considerations While Classifying Flower and Decoration Costs

The most critical factor is distinguishing between a consumable supply and a long-term capital asset.

Supplies vs. Capital Assets

• Supplies (Deduct Now): The primary test, based on IRS Publication 535, is whether the item has a useful life of one year or less. Weekly floral arrangements are a classic example.
• Capital Assets (Capitalize and Depreciate): Items with a useful life extending substantially beyond the year they are placed in service must be capitalized.

The De Minimis Safe Harbor Election

To simplify recordkeeping for smaller purchases, IRS Publication 535 provides a de minimis safe harbor election. This allows you to deduct the cost of tangible property in the current year if it falls below a certain threshold (generally $2,500 per item or invoice for organizations without an applicable financial statement). This is a practical way to expense items like a new set of banners that might otherwise need to be depreciated.

Program vs. Administrative Decorations

It is important to separate decorations used for your mission from those used for general overhead.

• Program Expense: Flowers and decorations for the sanctuary or worship space.
• Administrative Expense: A plant or artwork for the church's administrative office would be a management and general (administrative) expense.

Tax Implications and Recordkeeping

Properly accounting for these decoration costs is essential for your organization's financial statements and its annual IRS reporting.

How to Report the Expense

For organizations that file a Form 990, these costs are reported as program service expenses in Part IX.

• Supplies: The cost of flowers and other consumable decorations is included on Line 24, Other expenses, and allocated to the Program Services column.
• Depreciation: The annual depreciation for capitalized decorations is included on Line 22, Depreciation, depletion, and amortization.

What Records to Keep

You must have documentary evidence to substantiate all decoration expenses. Your records should include:

• Invoices from florists, decorators, or suppliers.
• Receipts for all material purchases.
• Proof of payment.

How Fyle Can Automate Expense Tracking for Flower and Decoration Costs

Fyle helps your ministry and administrative staff capture and organize all your decoration costs, ensuring every expense is documented and allocated correctly.

• Capture All Purchases: Instantly capture receipts for flowers or decoration supplies using the Fyle mobile app.
• Track by Service or Event: Code expenses to a specific service or holiday, like Easter Lilies or Christmas Decorations.
• Centralize Vendor Invoices: Forward or attach your regular florist or decorator invoices directly to Fyle for automatic capture.
• Automate Your Accounting: Sync categorized program expenses directly to the correct GL account in QuickBooks, Xero, NetSuite, or Sage Intacct.