Skip to main content

Online Payroll Services for Churches

Question:

Can you recommend an online payroll processing service for churches?

Answer:

We are not aware of any services that specifically target churches at this time. Existing services such as Paychecks, ADP, and Intuit's Paycycle are not always familiar with the unique characteristics of ministerial vs. non-ministerial compensation. MinistryCPA does not offer an online payroll processing service. However, we have been able to assist multiple churches to process their own payrolls. This last year, MinistryCPA aided 26 churches in preparing quarterly and annual payroll reports in cooperation with the work of their own personnel.

Ministries interested in a personal consultation should post a blog inquiry with suggested time(s) that will be best to call at a phone number they should provide. Also, they typically provide a website address for the organization, if available. The ministry's website may help us to understand the nature of the organization and whether we might be qualified to serve it.

We respond with a suggested phone appointment time, cost information, and disclosures that we as CPAs are required to make when we provide consultation services.

Comments

  1. Great post, Corey!

    What exactly does a church need to have specifically that a normal or online payroll service doesn't specifically provide?

    I'm asking because we are in Arkansas and have made our payroll program accommodate farmers with multiple sources of income. We want to provide a great service to all businesses, and this post really got my gears turning about how different businesses can benefit from a customized payroll system.

    An example might be that you need to Geo-locate your workers when they clock in from their cell phones if they are doing missionary or other ministry work in another city or even overseas. This feature was originally made for construction contractors to keep track of their subordinates.

    I'm extremely interested in hearing what churches may need to have a customized payroll solution that will help their business! Please email me at greg@tcoa.net or just comment on my post, as I am following it and your blog from now on! Keep up the great posts.

    ReplyDelete
  2. An online service must be prepared to respond to unique ministerial provisions, for example: housing allowance designations and Form W-2 disclosures.

    ReplyDelete

Post a Comment

Popular posts from this blog

Housing Allowance and Form 1099-MISC Reporting

Question:

A church provides its minister a housing allowance, but for other purposes it believes that it must report the full amount of compensation (including the non-taxable housing allowance portion) on Form 1099-MISC (in order to demonstrate the full earnings of the minister). If the church reports his compensation,including the housing allowance, on Form 1099-MISC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040?

Answer:

This questions brings up a couple of issues. First, most ministers are properly classified as employees who receive Form W-2, not as independent contractors who receive Form 1099-MISC. On Form W-2, Box 1 for taxable compensation is reduced reflecting the church's designation of a portion of his pay as non-taxable. Then in Box 14, it typically reports as a memorandum item his additional non-taxable, housing allowance compensation. In the situation addressed in the question, this Form W-2 reporting may or may not a…

Review: Form 1099 Payments to 501(c)(3) Organizations

Question:

A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC?

Answer:

We have written similar blog posts on this topic in the past (listed below), but we figured it was a good time for a review. 

Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The 2015 Instructions for Form 1099-MISC state that "payments to a tax-exempt organization" are exempt from reporting a Form 1099-MISC. 

The following are typical examples of payments of $600 or more by a church which are subject to reporting a Form 1099-MISC:
Rent paid to an individual (non-corporation)Payments for services rendered by individuals who are not employees (e.g. janitorial service, facilities, snow removal, guest speakers)Support sent directly to missionariesHere are some similar blog posts that we have written in the past:

Form 1099 for Payments to Other Ministries
Form 1099 for Non-profit?
Fo…

Gifts Paid Out of Church Funds: Form 1099-MISC Requirements

Question:
 A church gave a wedding gift of $1000 to a couple who are church members. No goods or services were provided by the couple in exchange for the gift.  Is a Form 1099-MISC required? 
Answer: In the following answer, we assume that the couple are not employees of the church from whom the gift could not be viewed as compensation for their services. Also, the amount seems to be small enough to avoid any concerns of "private inurement."

Accordingly, no Form 1099-MISC is required. According to the 2017 IRS Instructions for Form 1099-MISC a Form 1099-MISC is only required for payment of goods or services. The requirements are as follows:
"File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:  At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);  At least $600 in:  1. Rents (box 1);  2. Services performed by someone who is not your …