- Serving Taxpayers Since 1993
- File In Person or Fully Virtual
- Year-Round Help, Not Just Tax Season
- Nonprofit & Church Specialists
- Flexible Refund & Payment Options
Hiring your first worship leader or office manager is a milestone for a young Katy church. It also turns the church into an employer, with deposits, quarterly forms and year-end W-2s. Add a pastor whose pay follows clergy tax rules, and one payroll holds two sets of rules at once. We run payroll for churches and nonprofits so each person is paid correctly and each report is filed on time.
When You Need Church & Nonprofit Payroll Help
Most groups reach out at a turning point. You are adding paid staff for the first time. Your board never put the pastor’s housing allowance in writing. The IRS sent a notice about a late deposit. Or the volunteer who handled payroll moved away. A payroll error repeats every pay date, so the sooner it is caught, the smaller the cleanup.
Our Church & Nonprofit Payroll Process
For income tax, a pastor paid a salary is usually treated as an employee and gets a W-2. For Social Security and Medicare, that same pay is self-employment income. So the church withholds no FICA from ministry pay and pays no employer match, and the pastor covers it on their own return. IRS Publication 517 on ministers’ taxes also explains that a pastor can sign a voluntary withholding agreement with the church, so tax comes out of each check instead of landing all at once in April.
A housing allowance has to be set by the church before it is paid, most often in board minutes. The pastor can then leave it out of income tax, within IRS limits tied to real housing costs and fair rental value. It still counts for self-employment tax.
Staff who are not clergy get standard payroll: federal income tax and FICA withheld, deposits made on schedule, Form 941 each quarter, and W-2s and 1099s in January. We can pay weekly, every other week or monthly, and we report new hires to the state’s new-hire reporting program. We can also prepare federal tax returns for Katy pastors so both sides line up.
Church & Nonprofit Payroll Cost in Katy
Cost depends on how many people you pay, how often you pay them, and whether ministers and regular staff share one payroll. A group that is behind on deposits or quarterly forms needs catch-up work first. You get our fee before we begin.
Texas Payroll Rules for Churches and Charities
Texas keeps payroll simpler than most states. There is no state income tax to withhold and no city income tax in Katy, so a staff member living in Brookshire and another living in Fulshear are handled the same way. Pastors who moved here from a state with an income tax often notice the difference on their first check.
Unemployment tax is where Texas gets particular. Under state law, a 501(c)(3) nonprofit generally becomes a covered employer once it has had at least four people working in 20 or more different weeks of a year. A 501(c)(3) can also choose to repay the Texas Workforce Commission for actual claims instead of paying the regular tax, an option the TWC lists on its page for reimbursing employers. Some work done for a church falls outside the system altogether. We help you sort out which rules fit your staff before the first quarterly wage report is due.
Why Choose Us for Church & Nonprofit Payroll
Clergy pay is a narrow corner of tax law, and we work in it all year. We have prepared taxes since 1993. Because we also keep church books and prepare pastors’ returns, a payroll question gets checked against the whole picture. Our Kingsland Boulevard office is open weekdays and Saturdays, and you can send everything online.
Pay is one part of our church and charity accounting west of Houston.
Common Questions
Should our pastor get a W-2 or a 1099?
Usually a W-2, when the church pays a salary and directs the work. A guest preacher paid now and then is a different case and often gets a 1099. We look at how each person is paid before deciding.
Can you take over payroll in the middle of the year?
Yes. We pick up from your last payroll report, check that deposits and quarterly forms so far match, and carry on from there. Your year-end W-2s then cover the whole year.