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Are you absolutely certain your church payroll is being run correctly? Often, payroll administrators in the church believe they are running payroll correctly, but upon closer review, discover numerous errors. But with the possibility of even the smallest of payroll errors costing the church valuable funds, many churches outsource their payroll to help avoid costly mistakes.

While churches are considered charitable organizations and classified as nonprofits, according to the IRS, they operate with a tax-exempt status. Processing payroll for churches can be difficult because of not only their federal tax-exempt status and the often differing rules and regulations at the state level, but also the complicated nature of clergy payroll.

Find a Payroll Service Provider Who Understands Your Church’s Needs

As you look to outsource payroll processing for your church, keep in mind your specific payroll needs as you shop for the right payroll service provider. Find out if the provider has experience in processing payroll for churches by obtaining references or testimonials. If the payroll service provider has few clients with similar needs, it is likely they will not have a full understanding of your clergy payroll needs.

Similarly, compare prices for the services each payroll service provider offers and inquire about annual fees or increases, making sure that outsourcing will help your church save time and money while streamlining your payroll processes. Outsourcing payroll processes should ease the administrative burdens, freeing up time and dollars to assist the ministry in other ways.

Churches Looking for Assistance in Labor Distribution Outsource Payroll

Also, many churches struggle with labor distribution as one person working for the church may wear many different hats. You should look for a payroll provider that offers customizable reporting for your church along with either an integrated time and attendance system or a way to seamlessly import information from existing time clocks to increase efficiency and accuracy.

Make sure the payroll service provider is the right fit for your church by asking the following:

  1. Which federal and state payroll taxes apply to my church and which are exempt?
  2. How can their system handle pastoral pay or clergy payroll?
  3. How easily can you add or delete employee information or make employee changes within their system?
  4. Can you track benefits related information such as 403(b) contributions?

After you make an educated decision about a payroll service provider, continue to ask questions to ensure your church funds are safe while helping you to maximize the efforts of your ministry.


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About Paycom

As a leader in payroll and HR technology, Oklahoma City-based Paycom redefines the human capital management industry by allowing companies to effectively navigate a rapidly changing business environment. Its cloud-based software solution is based on a core system of record maintained in a single database for all human capital management functions, providing the functionality that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Paycom has the ability to serve businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom serves clients in all 50 states from offices across the country.