How to Do Church Payroll

January 24th 2011

Introduction to Church Payroll

I challenge you to find a more difficult and frightening task for any church clerk/financial secretary to undertake then that of Payroll. I have seen the best of the best break under the weight of this task. Clergy often have very little choice but to go with the flow and hope the church doesn’t get called in by the IRS. So it’s with compassion on my fellow clergy and the scores of financial secretaries that are frightened to death that I submit the following.

First, please note that this should be thought of as experienced suggestions of things to consider regarding Payroll; I spent 27 years in ministry with half of those years as an administrative/executive pastor. I am also the co-founder of Church Office Online (http://coo.test) an online church management program.

Secondly, what you will find in this “How To” document are brief outlined directions with links to explore more, I will try to KISS (Keep It Simple Saint).

In-House or Out-Sourcing, that is the question

How do you choose between the two? You might already be at the point of decision, but before you take that leap of faith let me point out an important fact. Church boards, clergy and staff need to be educated on both options. More problems happen as a result of those who choose one over the other in an attempt to escape what they are unwilling to learn. I’m not suggesting you go back to college and take accounting, but what I am suggesting is that you put forth some effort to make sure that you’re making an intelligent decision. I would also suggest talking to those in your church who have a business and have had to deal with the general questions about payroll.

There are two directions In-House or Out-Sourcing for Payroll

In-House Payroll (i.e. Your Financial Secretary does the payroll)

Payroll Financial Secretary /Clerk Guidelines

  1. “Willing to do it” should not be the only qualification. (Remember you are putting your church and staff at risk).
  2. “Background Checks are a must” Don’t make me tell you one of my horror stories!
  3. “Proven knowledge of basic accounting must be required.”
  4. “Yearly Audit Review for the first year and every other year thereafter.”

Payroll Software

You would think that as a co-founder of a software company you would be expecting a sales pitch about now… not going to give you one. We decided that there was a vast quantity of great payroll software and services already out there.

Payroll Software is divided up into three categories:

  1. Desktop
    Pros: Most see it as a cheaper option initially.
    Cons: Most find out that new versions come at a cost and sadly they usually don’t come when you need it.
  2. Desktop w/Online Updating and Services
    Pros: It would seem that you have the best of both worlds
    Cons: Expensive Updates and new Versions, with great difficulty in maintaining system and browser compatibility.
  3. Online Software Service
    Pros: Accessibility from Home or Office
    Cons: Accessibility from Outside the Office

Out-Sourcing Payroll Services

  1. Local
    Pros: Local Support, Community Connection
    Cons: Generally More Costly
  2. Online
    Pros: Accessibility from Home or Office, Less Expensive
    Cons: Support not always easy to get through to

 

Thanks,

Church Office Online