If you run a non-profit or are considering running one, you may wonder, “how does a non-profit pay its employees?” After all, non-profits are subject to different rules than for-profit organizations, so naturally, payroll for nonprofits should work differently. So how do non-profits pay employees? Here’s some useful information about payroll for non-profits and charitable organizations that may help.
Non-Profit Payroll Rules
While there aren’t many hard and fast rules when it comes to non-profit payroll, there are some basic ideas to follow. Compensation for non-profit employees should be reasonable. Most use general industry information to determine salary amounts, with allowances made for the fact that non-profits don’t usually have the financial resources of many for-profit companies.
Executives of non-profits may be subject to additional scrutiny from the IRS regarding their salary and other benefits. Non-profit employees can receive bonuses, but you should check with the IRS for additional criteria that apply to non-profit bonuses. You should also be aware that non-profits do have to withhold federal income and social security or Medicare tax.
Another issue that may come up is how to best pay non-profit employees. Should they be regular staff or independent contractors? Keep in mind which classification your employees will fall under is not up to you.
The IRS has clear rules about who is a regular employee and who is an independent contractor, based on things such as how much control the employer has over how the worker does their job and what kind of benefits the worker receives. It will be to your benefit to look over the IRS’s 20-point classification checklist to determine whether your worker is a regular employee or an independent contractor.
Who Manages Payroll for Non-Profit Organizations?
While many non-profits use volunteers, when it comes to payroll, most will usually need a staff to keep regular operations up and running. There are enough variations and complexities when it comes to non-profit payroll that organizations often cannot avoid hiring staff to manage it. Especially when it comes to large non-profit organizations, managing payroll can be too difficult for one individual, especially one who is volunteering.
This can create a problem for some non-profit organizations. Non-profits that work with a large volunteer force don’t want to drain a lot of their resources paying on-site staff to manage payroll. The last thing you want is a situation where most of the people getting paid are the non-profit payroll staff themselves. Even if you have a volunteer force willing to handle payroll duties, that’s a large portion of volunteer hours lost to payroll when you could be using them for whatever purpose the non-profit is actually in business to address.
BCM Payroll Services, the Non-Profit Payroll Solution
Fortunately, for non-profit organizations in Pennsylvania and Maryland, there is an ideal solution — BCM Payroll Services, Inc. If you have lived or worked in the Pennsylvania or Maryland areas, you may know BCM Payroll Services, Inc., as a leading source of payroll management solutions for for-profit Pennsylvania and Maryland businesses, but you may not have been aware BCM Payroll Services, Inc., provides expert payroll solutions for non-profits as well.
There are a lot of issues to manage when it comes to non-profit payroll and little room for error. A mistake that brings the IRS down on a company can be devastating for a non-profit. BCM
Payroll Services, Inc., can:
- Manage all your non-profit’s tax withholding for all employees, and submit and furnish payroll tax returns as well as W-2s and 1099s.
- Double-check all wages, taxes and payments with a stringent reconciliation process, so you never have to worry about a mistake that will attract undue and unwanted attention to your organization.
- Provide cloud-based payroll so managers in your non-profit can easily track payroll tasks and employees can access their information anytime, anywhere, provided they have access to a computer and the internet.
BCM Payroll Services, Inc., can easily handle issues like direct deposit, wage garnishment and other paycheck services for employees in a variety of situations, whether they are full time, part time, independent contractors or have recently changed their position and salary within the company. BCM can manage all of it or just certain aspects of your payroll at your direction.
Take One Major Task Off Your Plate With BCM
As a non-profit, your time and the time of your volunteers and paid staff are better spent working toward a better tomorrow, not figuring out who paid what and when. Your organization is not set up for that. We are. Let us do what we do best, so you can do what you do best. For more information on setting up partial or complete payroll services for your non-profit organization with BCM Payroll Services, Inc., give us a call at 717-264-7374 or contact us online today.