Tag Archive for: payroll

Clocking in and Out: Nonprofit Payroll Issues

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Clocking in and out each day is a fact of life for tens of millions of workers around the country. But it’s often not the case at many charities and nonprofits, which can gauge an employee’s value by their impact, not just their hours spent in the office. 

Still, there are some situations where more precisely recording when (or where) you’re working can be beneficial to the organization. 

Let’s take a closer look at how and when it’s best used.

Common Nonprofit Payroll Issues

Nonprofit Payroll issues can present a wide variety of problems, several of which can potentially be helped by implementing a clocking-in and out procedure. 

These include both under- and overstaffing. For the former, tracking time on the job can be helpful to ensure enough people are contributing and preventing overworked employees. For the latter, a time clock can provide firm data that will help reduce unnecessary labor costs. Both of these are vital to operating in the most efficient way possible, allowing the most funding and effort to go toward the nonprofit’s mission.

In other cases, it may not be up to your organization. Grant-funded programs often require employees to track their time to ensure money is being used appropriately. The minor inconvenience of clocking in and time tracking can be far outweighed by the financial benefits these programs offer, making it a no-brainer decision.

Unfortunately, time-related payroll issues aren’t the only ones confronting many organizations. One of the most significant is simple employee turnover. High turnover usually leads to higher administrative costs for onboarding and other training needs. It’s among the reasons why it’s so critical to find the right-sized staff and keep good employees for the long term.

Situations When Payroll Issues Make Clocking In and Out Necessary

There are a variety of circumstances where clocking in and out could become necessary for the sustainable growth of the organization.

1. Compliance with Labor Laws and Overtime Management

Like any other employer, nonprofit organizations are subject to labor laws and regulations. With accurate time-tracking, it’s easier to stay compliant with these laws. 

This especially applies when managing overtime. There is a lot of work to be done at nonprofits and many times hourly workers are required to work overtime. When clocking in and out is required, it helps manage these hours and ensure the employees are being compensated correctly. 

When determining which employees should be paid for overtime, a nonprofit should consider exempt vs. non-exempt employees and adhere to the classification of employee issues from their respective states and the Department of Labor. 

You can find more guidance on whether employees are eligible for overtime pay by visiting the Department of Labor’s website and consulting with your employment law attorney. 

Please note penalties for misclassification of employees and failing to pay them overtime are significant and nonprofits are not exempt from fines simply because they didn’t know.

2. Data Analysis, Budgeting, and Resource Allocation

Budgeting and resource allocation are essential for nonprofit organizations. To get these things right, data analysis has to be done correctly. Time-tracking data can be used for:

  • Evaluating workforce productivity
  • Making informed decisions about staffing and scheduling
  • Gauging labor costs

3. Grant Funding and Compliance 

As mentioned previously, many grant-funded programs often require employees to track their time to ensure money is being used appropriately. If labor costs are part of the grant agreement, time-tracking will most likely be required. 

If this is the case and time isn’t properly tracked, it could lead to revocation of the funds. 

4. Accountability

Time tracking holds employees accountable for their work hours. While you don’t want them to feel like they are under a microscope, you can provide the valuable reasons listed above to reiterate the importance. 

This also will give them a good idea of how and where they spend the most time, which can improve their overall productivity. 

Quick Tip: Use Time-Tracking Software to Optimize Efficiency

A time-tracking software will enhance efficiency, transparency, and compliance for your organization. Here are a few pointers for successfully adopting a time-tracking software: 

  1. Define your objectives for the software and make them clear to the team and stakeholders. 
  2. Provide training, set processes, and create clear policies for time-tracking using the software. 
  3. Follow through, evaluate, and adjust the software when necessary. 
  4. If possible, integrate the time-tracking software with your payroll system to streamline the process and reduce the risk of errors. 
  5. Require all employees to log their time, regardless of whether or not they are hourly or salaried employees. By doing so, you can collect better data on your entire staff.

Search for Guidance on Managing Payroll Issues

What many new nonprofit leaders might expect to be a mundane administrative task can often become a serious headache for organizations. Nonprofit payroll issues can have dramatic and negative impacts on the organization as a whole, robbing leaders of attention and time in addition to contributing to waste. 

Time-tracking, in some cases, can be the best solution for mitigating these issues and improving efficiency throughout the organization. 

However, if you run into a nonprofit payroll issue that time-tracking can’t fix, getting help from experienced professionals like those here at The Charity CFO is a far easier, faster, and less stressful way to reach a better result. 

We can help spot potential issues, present solutions, and advise your organization on the best ways to implement them. Contact us today to get advise on how to make your accounting and payroll solutions easier. We work with numerous payroll platforms and are happy to look at yours to see if there is a simpler way to get better results.

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When to Look for Expert Nonprofit Accounting Services

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When you are a nonprofit organization, finding expert nonprofit accounting services may not be high on your to-do list. Surely there are more important things to focus on instead of focusing on accounting, especially because your organization’s goal is not to make more profit?

In reality, nonprofit organizations can benefit a lot from nonprofit accounting. This article will go through the scenarios when you would need to look for expert nonprofit accounting services.

1. You Need to Consider COVID-19 Implications

The pandemic has resulted in a lot of changing regulations and greater overall uncertainty regarding the finances and accounting requirements of a firm. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in March 2020, affects nonprofits as well.

For organizations with less than 500 employees, you can have access to small business administration (SBA) loans or loan forgiveness. You can also access emergency economic injury disaster loans (EIDL) grants and employee retention credits.

For larger organizations with more than 500 employees, you can only access employee retention credits and EIDL grants.

The eligibility criteria and the need to report benefits from the CARES Act will mean that you can benefit from having expert accounting services providing you with greater insight. They are a lot more knowledgeable on how the CARES Act will change what you report on your statements, and they will ensure that your financial reports will accurately reflect the adjustments while complying with regulations.

At the same time, other COVID-19 considerations can cause an accounting headache for your nonprofit. For instance, you may experience modifications in the number of liabilities you have or will need some guidance with the ongoing financial concerns of your nonprofit.

The COVID-19 pandemic is an unprecedented situation, and responding to accounting rule changes can be a challenge for everyone. By relying on an accounting service, you can rest well knowing that your audits and bookkeeping are all up to par.

2. You Find it Hard to Manage Cash Flow

Managing cash flow in a nonprofit can be more difficult or unstructured than a typical company. At the same time, it’s an important thing to consider, because you need that money to keep your organization going. You will therefore be able to benefit from nonprofit accounting, which aims to both manage and improve your cash flow.

A common challenge that nonprofits face is that their greatest cash flow only happens in certain seasons or months in a year, which means they will have to allocate this money throughout the less profitable months. By taking the time to properly plan your cash flow and ensure your balances will remain positive, you will need to spend a lot of time evaluating your finances and your budget.

An accounting service can analyze the existing financial information to understand where you get most of your revenues and benefits, and whether this is enough to sustain operations for a certain period of time. They can also pinpoint risk areas, where you may be spending too much or where you may be liable to losing a lot of money.

The information they gather will allow you to make well-informed decisions regarding your cash flow.

3. You Need Better Staffing and Payroll Strategies

Payroll management is a headache for any company, and it is a particularly challenging aspect of running operations for a nonprofit. Nonprofits are usually motivated by passion, so matters of staffing changes or payroll requirements can be a bit awkward to focus on. What happens, for instance, if there are some incredibly loyal staffers who are also becoming financially burdensome?

An accounting service can provide some insight into this area by identifying cost-effective strategies and the financial impact of having a certain amount of staff members. While it may not be the easiest thing to consider, expert accounting services will be able to pinpoint areas where you will have to cut costs to ensure that your organization can succeed in its endeavors.

At the same time, you will benefit from speaking with an accountant before hiring someone new so that you can understand how this will impact your financial position in the long run.

4. You Have Difficulty Tracking Revenues

As a nonprofit organization, the way you receive revenues will be very different from the orthodox method of selling products for profit. Your revenue will come from donations and grants more than anything else. The accounting process will be different for you, but it is just as important so that you can manage cash flow and understand your company’s financial position.

By having nonprofit accounting services helping you out, they will be able to maintain accurate and updated financial records which track all the revenues you receive. This ensures that you have a sound knowledge of how well your company is doing, and also prevents the possibility of you presenting inaccurate data in your financial reports.

Tracking this information will also be important in ensuring you continue receiving grants in the future.

Situations When You Need Nonprofit Accounting Services

As a nonprofit, you can benefit a lot from accessing nonprofit accounting services. Your accounting needs may be unique, and you may not be profit-motivated, but managing your finances is essential to ensure your organization survives.

Nonprofit accounting services can provide assistance if you need help with COVID-19 considerations, if you find it hard to manage cash flow, if you need better staffing strategies or if you have difficulty in tracking your revenues.

Contact us today for expert accounting services for nonprofits.

Using Nonprofit Accounting Services to Help with Payroll Management

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Having a hard time managing your payroll?

This problem is much more common if you’re a nonprofit organization. Whether you’re a public charity, private foundation, or civic leagues, the special rules on nonprofit payrolls can be taxing. You have varying HR elements, from volunteers and contractors to board members.

However, a simple solution is to hire nonprofit accounting services. Excited to overhaul your payroll management? Read on and learn these impressive facts about outsourcing accounting services:

1. Payroll Services Remedy Mistakes

Mistakes can lead to law-imposed penalties. If you’re losing money because of payroll errors, outsource your accounting services. These professionals are vigilant and can resolve them before they become troublesome.

Nonprofit accountants use automated audit software to verify each payroll. They’re proactive in letting you know when they encounter errors. It paves the way to corrections before processing the payroll.

You’ll get the accuracy nonprofit payroll software offers. These professionals check your work constantly. They help you avoid mistakes while giving you ample opportunities to learn.

Getting help means familiarizing your accounting department with the rules. It prevents complicated situations from happening. It allows you to be more decisive and have more confidence with how to go from there.

You need not take your chances when you have payroll experts. They will address various issues to ensure you’re following the law. You’ll get a provider that caters to your nonprofit accounting needs.

The software these companies use is complex and specialized. It aids with every step of the process when checking for accuracy. It saves lots of time since you need not retype information across reports.

2. Payroll Services Eases the Process

Nonprofit organizations often put too many roles on their HR and accounting departments. If it’s your situation, hiring an accounting company is beneficial. It allows you to focus more on other issues like finding proper connections to grow your donations.

A payroll service offsets the hours spent reviewing and verifying payroll data in-house. It’s more efficient and can eliminate the risks of underpayments and late payments. It simplifies the process for your HR or accounting teams.

It’s also worth noting that the sooner you process payroll, the faster the payments are. It’s an important asset especially when your paid employees have limited budgets. With more steps eliminated, you won’t have to worry about low morale.

3. Payroll Services Enable Paperless Processing

Paperless payroll systems save more money while staying environment-friendly. Whether you’re looking for more efficiency or care about the environment, payroll services fulfill both. An online nonprofit payroll system streamlines the process across various departments and roles.

It also means you’re riding the wave of the future with paperless payroll. With enough expertise, you can collaborate with your accounting service. It helps you shift from paper to mobile payroll apps and document storage online.

You’ll have more functionalities with your payroll system. Employees can look at their payroll data in real-time. Your accounting department can change security levels to keep sensitive data from getting compromised.

4. Payroll Services Enable Real-Time Tracking

Things are easier when everyone gets quick information access. When professionals track your payroll system, you’ll know when problems happen. It means making timely changes to correct these issues.

It allows you to get closer to a hassle-free payroll process. You’ll always be on time, ensuring everyone’s satisfaction. This process becomes even better when using an integrated system.

You’ll always have an idea about the current labor costs situation. It allows your nonprofit to make more financially-sound decisions. It ensures everything is up-to-date and adherent to your cause.

Why Nonprofit Accounting is More Difficult

Without professional help on accounting for nonprofit organizations, you’ll encounter some hardships. The following are unique challenges for nonprofit payroll accounting. Use them to inspire your organization to outsource:

1. Financial Inexperience

Your board members are accomplished professionals. They have lots of useful skill sets that bring benefits to your organization. However, it’s uncommon for them to come from financial backgrounds.

Your organization must have a higher level of financial transparency. It gives your organization the right information for decision-making. Understanding the nonprofit’s financial aspects is necessary to help the board focus on a higher-level view.

Never let financial bookkeeping distract your leadership from the mission. Outsource professionals that specialize in nonprofit organizations. It maximizes your organization’s greatest potential.

2. Donor Expectations

As a nonprofit, your donor expectations are one of your priorities. Entities donate funds because they believe in your cause. Your funds must go to where your donors expect them, like programs that further your mission.

Your organization must do it without overspending. It means smart budgeting on administrations, expenses, and fundraisers. Keep your donors updated on your expenses to help build their trust.

3. Strict Audit Requirements

Nonprofit organizations have stricter audit requirements. People expect your reporting and internal control standards to be better. Most states require audits if you get at least $500,000 in donations.

This standard is necessary because the funding comes from public donations. It means everyone must know where the money goes. Your organization is accountable to use the funds correctly and advance your mission.

4. Public Trust

As said above, your funding comes from various public entities. It places the burden of public trust upon your organization. These people expect you to have an effective and efficient operation.

Often, they hold your organization to higher standards compared to for-profit businesses. Some organizations serve as watchdogs. They track your financial activities to ensure you’re using your funds as intended.

 

The same applies to your payroll management processes. To avoid discrepancies, invest in nonprofit technology. It can help you further your cause, helping you establish your local presence.

Hire Nonprofit Accounting Services Today!

Never let the lack of financial expertise ruin your nonprofit organization. Outsource nonprofit accounting services to take the burden off your shoulders. It allows you to focus on more important matters for the greater good.

Need a hand with accounting? Use our contact form and request a meeting with us today.

Common HR Compliance Mistakes in a Nonprofit

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It is no secret: people drive the mission in a charitable nonprofit.

So, human resources are critical towards the overall success of a nonprofit. Staff are the key to turning your nonprofit into a successful one. But, people providing services to nonprofits can be classified as: employees, independent contractors, or volunteers.

Because employment laws and specifics are complicated, and subject to change, Tosha Anderson, CPA, of The Charity CFO sits down with Moses Balian, an HR Consultant at Justworks, in the latest episode of A Modern Nonprofit Podcast.

LISTEN TO COMMON HR COMPLIANCE MISTAKES IN A NONPROFIT PODCAST EPISODE HERE!

In this episode, Tosha and Moses discuss:

  • Understanding the difference between an employee and an independent contractor
  • Deciding whether, and how, you should pay interns
  • Creating lasting relationships with volunteers, and when you should pay them
  • Per diems
    • When is it acceptable to pay freelancers or staff a per diem?
    • What happens to hourly or salary when you initiate per diems with freelancers?
  • And much more!

Importantly, the conversation and tips on this version of A Modern Nonprofit Podcast is not intended to be legal advice. Rather, it is an opportunity to learn the endeavors that have worked for nonprofits and human resources professionals as a means of guiding your modern nonprofit to achieve greater success.

That said, The Charity CFO utilizes JustWorks to ensure its employees are correctly compensated. As Moses said in this podcast, JustWorks helps entrepreneurs and businesses grow with confidence. Your nonprofit can receive access to big-company benefits, automated payroll, HR tools, and compliance support — all in one place.

Consider JustWorks today and use The Charity CFO’s referral code, which you can access here. 

You listened to this episode of A Modern Nonprofit Podcast. Now what?

Check out The Charity CFO on social media and on YouTube. As we strive to be a modern resource for modern nonprofits, our community is growing like never before. Follow and subscribe to our content for future episodes releases, nonprofit accounting tips and much more related to helping your organization achieve its best self.

Don’t forget to SUBSCRIBE to A Modern Nonprofit Podcast, too! 

Interested in learning more about how our organization can best help your nonprofit achieve efficient accounting and bookkeeping practices, all at a price you can afford? Request a free consultation with us and let’s start your nonprofit’s journey to newfound success TODAY. 

 

 

Nonprofit Taxes & the IRS: Ep. 2 of A Modern Nonprofit Podcast

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A Modern Nonprofit Podcast is back for Episode 2. Tosha Anderson and Ben Golden of Golden Tax Relief discuss nonprofit taxes and the IRS!

But before we dive in, if you were lucky enough to donate to a charity this year, The Charity CFO thanks you. As expert accountants for nonprofits, our team knows that contributions of any kind are important. There is a lot of money involved in the nonprofit world, especially on the business side!

This episode covers nonprofit taxes.

A Modern Nonprofit Podcast Ep. 2 covers nonprofit taxes and dealing with the IRS.

Nonprofit Taxes and the IRS Key Points

Aside from payroll, the leaders agree that compliance is the key. When considering nonprofit taxes, Tosha and Ben discuss the responsibilities of nonprofit board leadership. They also talk about why you must have plans for payroll, reimbursements, and compensation purposes.

SUBSCRIBE, THEN LISTEN TO A MODERN NONPROFIT EPISODE 2: NONPROFIT TAXES AND AVOIDING TROUBLE WITH THE IRS FEAT. BEN GOLDEN OF GOLDEN TAX RELIEF

Administrative work is important for nonprofits, but if you are wondering if a nonprofit gets taxed, then listen in as Ben talks about how nonprofits can save money with taxes.

If you haven’t already, listen to Episode 1 of A Modern Nonprofit Podcast here. Tosha talks with Eileen McGhee of Veer Up to talk about how to reduce racism, be a diverse organization and promote a positive nonprofit culture.

Additional Links

Questions about the IRS and your nonprofit? The conversation continues at A Modern Nonprofit Facebook Group. Here, professionals collaborate to talk about industry trends and issues. Don’t miss out.

Additionally, if you are seeking help with wage garnishes and delinquent tax returns, check out Ben Golden at Golden Tax Relief.

Lastly, forget to Subscribe to A Modern Nonprofit Podcast for future episodes, and make sure to share/tag us on your Twitter, Facebook, and additional social media feeds!

 

How to Manage Payroll as a Nonprofit

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According to the United States Bureau of Labor Statistics, 12.3 million people are employed by nonprofits. That’s a lot of employees to manage!

Payroll is a critically important part of running any business and nonprofits are no different. This guide will explore everything you need to know about how to manage payroll for your nonprofit with accuracy.

Finding Payroll Services

Firstly, your organization needs a payroll manager and software to manage all the employee data. What is a payroll manager? This is someone specifically trained to manage the ins and outs of all your payroll needs including taxes and employee benefits.

Your organization likely needs to invest in a quality portal for payroll services. If your organization is really small and brand new, you might be able to get away with just a spreadsheet, but it’s not the best practice for accuracy and data transparency.

Payroll management isn’t easy and if you’re asking yourself how to manage my payroll, you’re definitely in need of professional assistance. Besides knowing the intricate details of payroll tax management and other tricky laws, these services can cut checks, facilitate direct deposits, and even track paid time off.

The best payment systems are two-sided so that employees can also log in and download their own data when they need it. Most of them even have smartphone apps!

This is a great resource for finding the payroll system that fits your organization. Paying a monthly cost for these services is well worth it in the long run for you and your employees to have a good work experience.

Getting Started With Payroll

As you get ready to start paying your employees, you should ask yourself a few key questions. This will help make tax season easier and ensure there aren’t any issues with your employees!

What Are Your Benefits?

Keeping track of all the information for each employee’s benefits can seem like a ton of work, but it’s crucial that the correct amount of money is removed from your employees’ pay checks each month.

Employee benefits might include, but aren’t limited to:

  • Health Insurance
  • Health Savings Account/Flexible Spending Account
  • Dental Insurance
  • Vision Insurance
  • Retirement Plan
  • Life Insurance
  • Transportation Fund
  • Paid Time Off
  • Sick Time

All of these benefits are up to the employer to offer, but every organization should verify their exact requirements to provide health insurance to their employees under the Affordable Care Act. This also may stipulate what portion, if any, of employee health insurance your nonprofit is required to cover.

Who Are Your Employees?

Do you hire contractors or part-time staff? These workers may not have employee benefits and their payroll will need some tweaking. Contractor taxes also differ from that of full-time employees, so be sure to have all of this information prior to starting.

In addition to collecting W-4 forms from employees, be sure to provide all necessary paperwork for enrolling in health insurance and other employee benefits. Keep meticulous records on each employee both digitally and in hard copies.

How Are You Handling Payroll Taxes?

Tax season might be everyone’s least favorite time of year, but it’s crucial for your nonprofit organization to withhold the correct amounts for each employee for both state and federal taxes, as your state allows.

After you collect each employee’s W-4 tax form, input the data into your payroll software and be sure to verify this information with your employee.

Here is a list of some taxes your organization might need to withhold from paychecks and potentially match per dollar:

  • Local Income Tax: This pertains to cities, like New York City or Washington D.C.
  • State Income Tax: Some states don’t have this, like Tennessee and Florida. It depends where your nonprofit is located.
  • Federal Income Tax: The W-4 will let you know how much to withhold for each paycheck.
  • Worker’s Compensation: This is to protect your nonprofit from any injuries that could occur on the job.
  • State Unemployment Tax: This is a pool of funds that go to unemployment benefits.
  • Social Security: This supports those on social security benefits.

What Are My Legal Requirements?

In addition to your requirements to provide healthcare, your full-time employees have rights that you must adhere to according to the law.

For example, depending on your state, you may be required to offer a certain amount of sick days or vacation days.

You also may be required to provide paid or unpaid leave for new parents. Check with your nonprofit legal counsel to learn your particular state’s legal requirements before setting up your payroll system and employee handbook.

Tips to Manage Payroll

Part-time employees, full-time employees, and contract workers all rely on your ability to pay them on time and in full. While nonprofits might be exempt from certain taxes, they still function as a business and owe their employees a progressive payment system that accommodates all their needs.

If you don’t want to hire a payroll service, here are a few more options.

Accounting Department: If your organization is growing rapidly, consider forming a department to handle all of the financial information in-house with the help of software.

Hire a Bookkeeper: Bookkeepers have an extensive knowledge of payroll and financial systems. They can either be someone you hire to be in-house, but if your organization is small it is worth investing in a company and being one of their clients. Then, your bookkeeper is only used when needed. This is a great way to cut costs while taking the burden of payroll off your own plate while ensuring accuracy for employees.

Online Payroll/Software: If you’re brave, scrappy, and financially inclined, try managing all of this on your own.

Finalizing Employee Payroll

Now that you have all the insider tips on how to manage payroll for your nonprofit, contact us for more information on how we can help your nonprofit have efficient and transparency pay processes.

After all, you should focus on your mission and we’ll handle the rest!