How to Do Payroll

How to do payroll properly for a church or nonprofit can be a daunting task.

There are so many changing laws that keeping up with them all can be equally challenging.

How to do Payroll for a Church

How to do payroll tips:

Even if you hire a payroll service you need to be familiar with how to do payroll for your church or nonprofit organization, because when it comes to penalties ... it will be your organization that will be held responsible.

Speaking of payroll services, make sure the one you are currently using or considering is familiar with nonprofits, churches, and ministers. 

If you only have a minister as an employee, you may be able to set up and administer their payroll easily ... if you understand the specific laws on ministers. Read the issues that affect ministers taxes.

Another issue you should be familiar with is the classification of your workers.  Due to the passage and implantation of the Affordable Care Act, the IRS has stated that they will be looking closer at employee classifications. So knowing how to classify workers is a must. See details in the Misclassification article below.

Learn what forms you need to file and when they are due on the articles below as well.

Need help setting up an effective accounting system!

Overwhelmed with the accounting part of your ministry?

Have a high turnover of individuals keeping the books?

Hiring a full time in-house bookkeeper not affordable or even a possibility at this time?

Let us take care of your books! 

We can also set up an accounting system and train you how to use!

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Payroll can be a daunting task for volunteers and paid staff of small churches and nonprofits. See this step by step guide to ensure you have your i's dotted and your t's crossed ...

Step-by-step Payroll Guide

The Church Accounting: How To Guide devotes a whole section of the book to payroll for churches. It covers payroll terminology and forms and then takes you through the steps necessary to set up a payroll, calculate and file the necessary taxes and forms, and even details how to handle the minister's payroll. It also includes sections on filling out IRS forms: 1099 and 1096.

If you have QuickBooks or are considering using it in the future, go ahead and purchase the QuickBooks for Churches and the How To Guide combo for a complete package on setting up and administering a payroll using QuickBooks.

QuickBooks for Churches & Church Accounting Combo Bundle

One of the biggest challenges facing small churches and nonprofits today is how to properly manage payroll for their organization. See how to deal with these payroll issues ...

Manage Payroll

The IRS has the authority to assess a 100% penalty against the individual(s) responsible for withholding and paying federal payroll taxes, even if the person is an unpaid volunteer such as a church Treasurer.  The IRS aggressively uses this authority...

Federal Payroll Tax Issues

Church Accounting Package

A set of 4 ebooks that covers the following topics...

  • Fund Accounting Examples and Explanations
  • Setting up a fund accounting system
  • Donation management
  • Minister compensation and taxes
  • Internal controls and staff reimbursements
  • Much more - Click here for details

Misclassification of workers is a big concern for many churches and nonprofits. See how to classify your workers...

Misclassification of Workers

If you are a nonprofit or church, you are required to withhold and pay federal payroll taxes on your nonminister employees. See how to calculate those payroll taxes ...

Payroll Taxes

A form W-2 Wage and Tax Statement tells the IRS, the SSA, and the employee the amount of wages and withholding for the year. See how to complete this form and its accompanying Form W-3 for employees and ministers ...

Form W-2

If your church or nonprofit paid $600 or more in rents, services, prizes and awards and other income payments, you must complete and file a 1099 form ...

Form 1099

Form 941 is used to report the number of employees, total wages paid, withholding, and total payroll taxes due for the quarter ...

Form 941

Spreadsheet Package

The Spreadsheet Package includes 6 accounting workbooks PLUS a Word document with 3 examples of contribution statements for cash, non cash, and quid pro quo donations that you can customize for your own use!

  • Contribution Tracking Workbook
  • 5 Fund Automatic Accounting Workbook 
  • Bank Reconciliation Workbook
  • Collection Count Sheet
  • Mileage Log Workbook 
  • Much more - Click here for details

Check your state exemption labor and tax laws!

Do not assume just because your church or nonprofit organization is exempt on a federal level that it will be exempt on a state level...

State Exemption Laws

Fringe benefits are great to include in your pastor’s compensation package and offer to your staff; however, there are a few factors you should consider before you put together those benefits...

Fringe Benefits

Need a Consultation, help setting up an effective Accounting System, or someone to do your monthly bookkeeping?