Church Payroll and Compensation Rules

Generally, churches and religious organization are required to withhold report, and pay income and Federal insurance Contributions Act (FICA) taxes for their employees. Substantial penalties may be imposed against an organization that fails to withhold and pay the proper employment tax.
In addition, this is a target audit item for the Internal Revenue Service when it comes to ministries and nonprofit organization. Some churches have historically mishandled employee treatment. Some churches hire payroll companies to handle this process.

Here are some special rules for compensation to remember:

Withholding Income Tax for Ministers
Unlike other exempt organization or businesses, a church is not required to withhold income tax from the compensation that it pays to duly ordained, commissioned or licensed minsters for performing services in the exercise of their ministry. An employee minister may complete an IRS Form W-4 Employee’s Withholding Allowance Certificate, and the church should report the compensation on a W-2, Wage and Tax Statement. If the minister is independent contractor, the church should report compensation on 1099-MISC, Miscellaneous Income.

Housing Allowance
A housing allowance can be beneficial for ministers because an allowance for husing ex excluded from federal income tax. However, it is not exempt from the minister-s self-employment tax. In order to qualify for the exclusion from federal income tax, two very important conditions must be satisfied.
1. The housing allowance must be board approved before it was paid.
2. The minister actually spent the allowance on eligible housing expenses during the year.

The church must make sure the amount they designate as allowance for housing is determine beforehand. It should be included in a board approved resolution and properly documented in the church records. Most of the time, it is reviewed and adjusted before the beginning of each new budget year.

Social Security and Medicare Taxes –
Federal Insurance Contributions Act (FICA)
FICA taxes consist of Social Security and Medicare taxes. Wages paid to employees of churches or religious organization are subject to FICA taxes unless, wages are paid for services by a ordained, commissioned or licensed minister or a church, pays the employees wages less than $108.28 in a calendar year or the church is opposed to the payment of Social Security and Medicare taxes for religious reasons files IRS Form 8274.

Withheld employee income tax and FICA taxes are reported on IRS Form 941, Employer’s Quarterly Federal Tax Return or an annual Form 944, depending on your required filing status.

Federal Unemployment Tax Act (FUTA)
Churches and religious organization are not liable for FUTA tax.

Give Your Business and Personal Finances a Wellness Check

For richer, for poorer, for better, for worse. If you own a small business, these familiar wedding vows might signify more than promises to a spouse. They might describe your relationship with your business as well. And with good reason if your personal financial well-being is closely tied to how well your business is doing.
A strong cash flow is good for business and good for you. If your company’s cash flow isn’t as healthy as you’d like it to be, here are some things to consider.



Rely on Reports

What you don’t know can hurt you, especially when it comes to cash flow. If you’re not already checking them, start generating cash flow and cash balance reports on a monthly basis. If your figures are off for even a few months, find out why. A problem could be lurking.



Market, Market, Market

When things are slow, developing new business opportunities is critical to your cash flow — and perhaps, your company’s survival. But it’s also critical when things are good. You can’t afford to be complacent about the future. If you stop devoting time to growing your business, your success may be short-lived.

Look at Limits

In a cash crunch, many small business owners instinctively dip into their personal accounts to help their businesses over the hump. While this may be simpler and faster than some other solutions, it could turn disastrous for an owner’s personal finances if the business is seriously failing. If you haven’t already decided how much of your personal assets you’re willing to invest in your business, now may be a good time to come up with a limit.



Create a Credit Line

Even if you’re doing everything right, you could still hit a rough patch. Or, an opportunity might come up that requires some quick financial maneuvering. Instead of using your own money, consider using a line of credit. For maximum flexibility, establish a line of credit for your business before you need it. If you wait to apply until you’re in a bind or a hurry, you might be turned down.



Wedded Bliss

If your personal and business finances are intertwined, your planning should integrate the two.



Tax Credit Opportunities

Tax deductions aren’t the only things to consider when looking for ways to reduce your 2018 tax bill. There are a number of tax credits that you may be able to claim. A tax credit reduces your tax liability dollar for dollar (and, in some instances, may be fully or partially “refundable” to the extent of any excess credit).



Child-Related Credits

Parents of children under age 17 may claim a child tax credit of up to $2,000 per qualified child. The child tax credit is phased out for higher income taxpayers. A different credit of up to $13,810 is available for the payment of qualified adoption expenses, such as adoption fees, attorney fees, and court costs. The credit is phased out at certain income levels, and there are certain restrictions as to the tax year in which the credit is available. Look into claiming the child and dependent care credit if you pay for the care of a child under age 13 while you work. It’s available for 20% (or more) of up to $3,000 of qualifying expenses ($6,000 for two or more dependents). This credit isn’t confined to child care expenses — it may also be applicable for the care of a disabled spouse or another adult dependent.



Higher Education Credits

The American Opportunity credit can be as much as $2,500 annually (per student) for the payment of tuition and related expenses for the first four years of college. A different credit — known as the Lifetime Learning credit — is available for undergraduate or graduate tuition and for job training courses (maximum credit of $2,000 per tax return). You’re not allowed to claim both credits for the same student’s expenses, and both credits are subject to income-based phaseouts and other requirements.



Sometimes Overlooked

One credit that taxpayers sometimes miss is the credit for excess Social Security tax withheld. If you work for two or more employers and your combined wages total more than the Social Security taxable wage base ($128,400 in 2018), too much Social Security tax will be withheld from your pay. You can claim the excess as a credit against your income tax. The alternative minimum tax (AMT) credit is another credit that’s easy to overlook. If you paid the AMT last year, you may be able to take a credit for at least some of the AMT you paid. The credit is available only for AMT paid with respect to certain “deferral preference” items, such as the adjustment required when incentive stock options are exercised.

Your tax advisor can provide more details regarding these and other tax credits that may be available to you.



Need a Small Business Loan? Follow These Steps

Is it time to put your expansion plan on the front burner? Have you outgrown your current location? Do you need to replace some equipment? There are many reasons small business owners might be in the market for a loan. If you’ll be shopping soon, here are some pointers.

Check your credit. When you apply for a loan, the lender will look at your personal and your business credit histories. Before you start the application process, check to make sure both are accurate and up to date. If there are errors, resolve them ahead of time.




Polish your plan. Prospective lenders will want to know as much as possible about your business. Prepare a comprehensive, up-to-date business plan that provides information about your company (a description and an executive summary) and yourself (educational background and relevant experience). Since your plan may be pivotal in convincing potential lenders to approve your loan, consider including an overview of your management team and key personnel along with some market analysis and a marketing plan.

You should also be prepared to provide financial statements and cash flow projections. Lenders may request personal financial statements for you and other owners as well.

Check your equity. Before you submit a loan application, make sure you have enough equity in the business. Although requirements can vary, lenders generally want a company’s total liabilities to be less than four times equity. A lender may require you to put some additional money into your business before approving you for a loan.




Identify collateral. Lenders generally require collateral, an alternate repayment source that can be used in case your business isn’t generating enough cash to make payments on your loan. Either business or personal assets can be used. If you don’t have anything you can use as collateral, perhaps you can find someone who does who will cosign the loan.

Look for a good match. If you already have a good working relationship with a bank that lends to small businesses, it makes sense to start there. If you don’t, or if your bank isn’t a good match, do your homework. Look for lenders that do business with companies similar in size to your own. Finding a lender that’s familiar with your industry is an added bonus.


Why Small Businesses Should Outsource their Bookkeeping

We all get 24 hours in one day. But between answering texts, emails, filling staffing holes, attending meetings, networking, attaining funding and trying to have a personal life, how do business owners also run a successful company with 24 hours in a day?

Working with outsourced accounting and bookkeeping firms, you can surround yourself with experts, provides sound counsel, allows for business owners to focus and, and ultimately, increases profits. They are a trusted source of deep knowledge in an aspect of business and can quickly identify risks facing the operation and understand common pain points.  In addition to  bringing  solutions, best practices and efficiencies to quickly get to the desired solution.

Working with outsourced  accounting and bookkeeping firms also encourages owners to get answers to pertinent and sometimes not yet considered questions to prevent a sticky situation down the road. These questions also encourage decisions  to help get to a good consideration.

Most small business owners start a business to give themselves an outlet for their passion, not to meddle with bookkeeping, payroll and tax compliance. With outsourcing your accounting and bookkeeping it saves time and resources to keep your business needs rolling so you can invest in your passion.

A good accounting and bookkeeping firm will work to increase a company’s profitability.  While it’s true partnering with an accounting and bookkeeping firm requires an initial investment.  Accounting and bookkeeping firms offer turnkey services.  These add efficiencies lowering operation expenses, giving a leg up on the competition, an ultimately maximizing profits.

Ultimately, outsourcing your bookkeeping to experts is worth it.  Accounting and bookkeeping firms invest in making your business better and, in the end, provide efficiencies that add to the bottom line.  In addition, you’ll be able to grow your business, focus on what you do best, and lower your stress.

T. Williams & Associates believes when our client wins, our firm wins.  We will invest as much of ourselves to see your business succeed.  In the past 10 years, T. Williams & Associates have helped many small businesses get a handle on their accounting and bookkeeping needs by automating their back office finances, so they can increase cash flow, grow faster, and save more money on their returns.  You can use this link to reserve some time to chat: https://twilliamsassociates.youcanbook.me    Or just call us directly at 816-251-4527.

In the meantime, you can learn about our firm here: https://www.twa-accountingservice.com/

State-Funded Home Care Services – Available in Missouri

Consumer-Directed Services  (CDS)  funded through Medicaid to allow Medicaid eligible individuals with a disabling condition to choose their own attendant, aide or caregiver, including any family member (except spouse) to help with daily tasks in their homes.

Hire a qualified person (such as a family member, neighbor, or loved one, with the exception of a spouse or anyone under the age of 18) to help you with  daily living activities:

  • Dressing
  • Bowel and bladder elimination
  • Meal preparation and consumption
  • Transfers
  • Personal hygiene
  • Shopping and transportation
  • Maintenance and use of equipment and prostheses
  • Housekeeping
  • Ambulation and other functions of living

And, TWA Consumer Directed Services will pay your attendant an hourly salary to provide “hands-on” personal assistance that benefit YOU!  TWA CDS pays a premium salary from $9.20 to $10:00 per hour and up, depending on experience.

Consumer-Directed Option Eligibility Criteria

To receive TWA Consumer Directed Services all the following must apply:

  • Medicaid Eligible;
  • At least 18 years of age;
  • Able to direct their own care;
  • Capable of living independently with CDS;
  • Have a disabling condition that results in a need for assistance with daily living;
  • Meets state requirements  no cost nursing evaluation

TWA Consumer Directed Services number one goal is providing exceptional services to improve the lives of every person we work with.  We offer our clients the personal attention that will assist them in achieving their goals.   To begin services with TWA Consumer Directed Services, contact our CDS specialist today at 816-251-4529 or  click here to download our TWA CDS brochure  to learn more about TWA Consumer Directed Services and CDS.