Church bookkeeping
Church payroll and pastoral compensation
Paying a pastor isn't like paying other employees. Church payroll needs to follow the decisions your leadership and tax adviser have made, every pay period, and leave a clear record behind.
What makes church payroll different
Ministers are treated differently from most employees for several payroll purposes, including Social Security and Medicare, income tax withholding, and housing allowance. The IRS explains these rules in Publication 517. How they apply to a particular pastor is a tax question for the pastor and the church's tax adviser.
The bookkeeping job is to set payroll up to match those decisions, run it accurately, and keep records that show what was paid and why.
What church payroll support includes
- Payroll processing for pastors and church staff
- Pastoral compensation set up to match leadership's approved compensation package
- Housing allowances recorded as designated by the church, with the written designation (for example, board minutes) kept on file
- Accountable reimbursement records for ministry expenses
- Payroll costs reported against the budget each month
Exactly which payroll filings are included is confirmed in writing during your consultation, before any payroll work begins.
What stays with your tax adviser
Advice on how much housing allowance to designate, a pastor's personal tax return, and questions about a minister's tax status are outside bookkeeping. Danielson Bookkeeping & Consulting coordinates with the CPA or tax adviser you choose so payroll reflects their guidance.
Designate in advance
A housing allowance should be designated by the church in writing before it is paid. Keeping that designation with the payroll records is one of the simplest things a church can do to stay organized.
Church payroll questions
Do you handle payroll for pastors?
Yes. Church payroll, including pastoral compensation and housing allowances designated by church leadership, is part of the church bookkeeping service. Payroll is set up according to decisions made by the church and its tax adviser, and exactly which payroll filings are included is confirmed before work begins.
Start with a conversation
Let's look at your books together
Tell us about your church or business and where your bookkeeping stands. Carey will follow up to arrange a consultation, and you'll receive a written scope before any work begins.