Payroll and HR solutions for churches can be challenging. It’s easy to get overwhelmed trying to streamline HR administrative processes while managing special taxation issues, multiple campuses, accounting processes, and accurate labor allocation. However, finding a solution that automates these tasks can make your church payroll and HR easier.
This article will discuss common payroll and HR challenges for churches. We will then look at how payroll and HR technology can automate these processes so you can focus on growing your congregation and serving your community.
Common Payroll and HR Challenges for Churches
Special Taxation
Churches have special federal and local tax calculations and filings to remain compliant. These include handling specific income items related to ministers and church staff:
- Housing allowances for ministers
- Minister self-employment taxes
- Ordained ministers pay with Social Security and Medicare tax exemptions
Religious organizations also need the ability to configure ordained minister pay, so their self-employment taxes are accurate. Therefore, finding a solution that can support and calculate these taxation items automatically is crucial.
Multi-Campus Management
Many churches that have multiple campuses struggle to centralize HR tasks. These processes include:
- Recruiting, applicant tracking, and onboarding
- Benefits administration
- Performance management
Faith-based institutions often use various systems or manual processes to manage campuses, decentralizing their HR processes.
They need a solution that unifies all campus data in one platform. Centralizing HR workflows gives churches the real-time insight they need while empowering campus admins to streamline day-to-day operations.
General Ledger Mapping
Religious organizations need the ability to connect payroll and general ledger (GL) data for accurate reporting. They analyze wages at a granular level in their budgets. For example, a church might cost a Senior Pastor’s housing allowance to its own line item.
Accurate GL mapping allows faith-based institutions to concisely report employee and volunteer labor expenses to congregations and finance committees without manual data manipulation. Finding a payroll and HR solution that offers GL integrations with output file options ensures that churches can maintain accurate financial allocation.
Employee Classification and Labor Tracking
A common area of noncompliance for churches is the misclassification of weekend musicians and childcare workers. Faith-based institutions also need the ability to track employee hours and activities performed back to specific funding sources so they can allocate wages correctly.
Churches benefit from a payroll and HR solution that offers employee classification reports and labor allocation to different fund sources. Automating these processes helps mitigate risk and ensure accurate fund reporting.
How Payroll and HR Technology Helps Churches Overcome Challenges and Refocus on Your Mission
Partnering with a payroll and HR provider that understands your church’s unique needs allows you to automate your processes so you can refocus on your mission. To ensure you choose a solution that solves the challenges we’ve discussed and more, consider an HCM provider that offers the following:
1. Church Taxation Expertise
Working with a payroll and HR provider who thoroughly understands special taxation like ordained minister pay and housing allowance is vital to maintain 501(c)(3) status. Consider a provider with a certified tax team that knows how to set up a housing allowance for inclusion in the total income for benefits calculation, so it’s not a negative deduction.
Payroll and HR providers with church taxation knowledge can also help configure ordained minister pay, so self-employment taxes are paid accurately and timely. When HR and finance leaders can mitigate risks appropriately, churches have the extra funds to invest in community initiatives.
2. Centralized Database for Multiple Campuses
Churches need a single-system platform that offers centralized visibility into payroll and HR items across campuses. Administrative staff can view HR tasks and manage data efficiently. They can also leverage dashboards and reports to view essential HR data for more informed decision-making.
Furthermore, manager and employee self-service solutions empower HR to delegate responsibilities to individuals overseeing each campus. This centralization gives employees autonomy to complete tasks while HR maintains process control. When churches manage payroll and HR processes efficiently, they have more time to dedicate to community projects.
3. Church Software Integrations
Payroll and HR software solutions that offer exports and integrations with church-specific accounting systems such as Sage Intacct, ShelbySystems, and Blackbaud ensure accurate general ledger mapping and financial allocation.
HR solutions that offer accurate general ledger output files also help churches report labor expenses without manual data manipulation. Religious organizations have better control over costs and funds for local missions when payroll and finance data are connected.
4. Flexible Labor Tracking and Employee Classification
Partnering with a payroll and HR technology provider that makes it easy to maintain employee classification and labor tracking ensures compliance. Consider solutions that give you a dashboard view of employee classifications to make changes proactively and maintain compliance. Furthermore, HR systems that allow churches to configure dynamic (timesheets) and static (percent) labor allocations for hourly and salaried employees will streamline your labor tracking.
Religious organizations have unique needs when it comes to payroll and HR. These processes can seem overwhelming, but they don’t have to be with a payroll and HR partner that understands churches. Faith-based institutions can refocus on their mission of supporting their local communities when they have the technology and support to automate their payroll and HR workflows.
How APS Can Help
APS makes payroll and HR easier for churches, religious institutions, and faith-based organizations nationwide with award-winning software and support. Churches often turn to APS when faced with challenges such as special taxation settings for ordained minister income, quality support, and accuracy in labor reporting in the general ledger. Please feel free to reach out to Michael Wenning with any of your questions.
