Paperwork and other details

What you do next will depend upon the decision you made for accounting. If you chose to handle the accounting internally or hired a private company to handle the accounting you need to:

  • Set up accounts at a local financial institution. You will need account(s) where money can be deposited and used to pay bills. To set up this account you will need an Employer Identification Number (EIN). If applicable consider having the board chair and director both have to sign each check. The director or employees will be very vulnerable if there is not a good check and balance system for who has access to and reviews the accounts. You may also want to add a second staff member in case the director is on vacation when checks need to be signed.
  • Develop a positive relationship with an accountant - especially one with governmental accounting experience. S/he may be able to assist you as you learn how to account for your income and expenses. You may even need to budget money to pay the local accountant for advising you. Alternatively you can also work with the city or county clerk and recorder. They can also be of assistance. The downside is they often have heavy workloads and might not be able to assist you in a timely manner.
  • Develop a relationship with the Department of Administration's Local Government Services Bureau. They can also assist you with setting up your chart of accounts, handling income and expenses, and filing any required financial reports. Visit to find the representative for your county.
  • Set up your chart of accounts. These must conform to BARS - the Budgetary Accounting Reporting System. Because you are a government agency you are required by the Montana Code Annotated to use the BARS system to create your chart of accounts, record your revenues and expenses, and create pertinent reports. The Department of Administration's Local Government Services Bureau can assist you with this process. You can learn more here
  • Pass resolution(s) to create a library depreciation fund and/or other memorial funds. The district board can create a library depreciation fund to save money for capital improvement projects, purchases, and/or the purchase of equipment. See  MCA 22-1-716 for more information about depreciation funds. The board needs to pass a resolution for any other special types of funds. The Department of Administration's Local Government Services Bureau can help you with this process.
  • Purchase software to keep track of your accounting. If you go with a local firm or individual they may have recommendations. There are software packages designed for governmental accounting. They can be expensive, but are designed for government entities such as a library district. Contact the Department of Administration or other library districts for more information.
  • Design claim forms, petty cash forms, donation forms and any other paperwork that will assist you with accounting. You can use your current system as a guide or ask for examples from the city, county, or other library districts. You need some kind of trail to help you keep track of revenues and expenses.
  • Review the  Local Government Budget Act (MCA Title 7, Chapter 6, Section 40). This important set of laws will need to be followed. The Local Government Services Bureau of the Department of Administration says special districts are expected to follow the local government budget act in as much as applicable. The library district is expected to follow the rules that apply to counties.
  • Contact the Internal Revenue Service (IRS) to obtain paperwork that confirms your government entity status. Foundations and others who give grants want to see this information when the library is applying for a grant in order to be assured of the library's tax-exempt status. The website for government entities is
  • Identify how to handle investments. Through the transfer of money to your district or over time the library will have grants and/or other large donations that need to be invested. A foundation can do this for you, but for a variety of reasons the library board may wish to have investments handled by a local accountant and/or the local governing body. You need to talk to your city or county to find out if they would be willing to handle your investments. If they are that should be included in an MOU. If they are not interested or the board wants a local accountant/financial manager to handle the investments the board should consider purchasing Crime Insurance. This insurance covers the library if the person handling the money commits fraud. It can be acquired through a local insurance agent such as the one you might use for errors and omissions insurance and/or building insurance.

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