Business Essential Payroll

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Business Essential Payroll2021-03-18T08:01:38+00:00

Bringing the expertise of an industry leader to your payroll. Enjoy a convenient, reliable easy-to-use payroll and clergy care solution. Pricing and fees may vary

Why It Pays to Outsource Your Payroll

Frequently Asked Questions

Caution?2017-04-19T20:45:53+00:00

If your nonprofit incorrectly classifies an individual as an independent contractor, it can be held liable for employment taxes for that worker, plus a penalty. Even worse, you can be liable for some of his taxes! An employee is to be paid using the system of a W-2, which includes withholdings for Social Security and Medicare taxes.

What about volunteers?2017-04-19T19:21:08+00:00

As with its employees the nonprofit should maintain an accurate and current record of its volunteers. First and foremost please understand that an employee cannot volunteer their time to their employer, and once a volunteer becomes an employee, for income tax purposes, they cannot go back to being an uncompensated volunteer without first officially resigning their employment position. The nonprofit is allowed to appreciate their volunteers, as long as the total value of the gift(s) does not exceed $100.00 during the tax year. If the nonprofit gives a volunteer more than $100.00 during the year, then that volunteer becomes an employee and Medicare and Social Security taxes (FICA) must be withheld and a Form W-2 must be issued at the end of the year.

What about independent contractors?2017-04-19T19:20:28+00:00

Form W-9 is used by an organization to request the name, address, and Social Security number for an independent contractor who will be providing services to the organization. Another term for an independent contractor would be consultant or freelancer. There’s a distinction made between independent contractors and employees. They are treated differently in how their income is taxed and reported to the IRS. All non-employee recipients of nonprofit funds (i.e. independent contractors) who receive $600.00 or more during the year must receive a Form 1099. The funds cannot be classified as a non-taxable “gift”.

Who is an employee?2017-04-19T19:19:55+00:00

A general rule is that anyone who performs services for your organization is your employee if you can control what will be done and how it will be done. The nonprofit should maintain an accurate and current record of employees. If the organization pays an individual more than $100.00 during the year, then that person is an employee and Medicare and Social Security taxes (FICA) must be withheld and a Form W-2 must be issued at the end of the year. Employers must withhold the employee’s share and pay their matching share of FICA for employees. Employers cannot classify employees as self-employed to avoid paying FICA.

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