payroll taxes

[bsbrown]

I am so thankful the people on this forum are willing to share their vast knowledge. I pray one day I can provide an answer rather than seeking one. Our church has just opened a school which shares the same tax ID. Power church is run separately for the church financials and the school financials using separate standalone copies of power church on two different PC's. It was decided to do this since the school is not in the same location as the church. Since the tax ID is the same, the school lets the church know how much payroll taxes to pay and the church pays both the church's and school's. The school then electronically transfers the money to the church's bank account. If the school and church were just in separate funds using the same copy of power church, it would be simple but since they are not, the question is how to record the transfer out on the school account and transfer in on the church account. Also how to properly record the payroll taxes for the school on their computer as well as the churches. Hope this is clear and someone has an answer.

[bsbrown]

Oh Neil - I need you.

[NeilZ]

Oh Neil - I need you.

I looked at this and said to myself "I got nothin .. "

There is so much going on there, I'm afraid to even offer any advice.

I'd find out how to get another tax ID for the preschool, and then get it registered as a non-profit associated with the church.

That said after thinking about this a while (it was in the back of my mind) ... payroll taxes are normally credited to a liability account, and normally debited from an expense account. In this case all you want to do is basically create a 'deposit' transaction which will DEBIT the checking account, and credit the liability account.

Then when the taxes are paid, you just debit the Payroll Tax liability as normal, and credit the checking account. Its basically a 'pass thru' at this point. However, this also means that you won't be able to use the 941 reports created by Powerchurch as the church payroll system will not have the data that it would need to produce a correct 941.

This is why I said there is so much going on there.

[bsbrown]

this is basically what I did. For some unknown reason the pastor doesn't want to get another tax id number. I'll check with our cpa about associating it with the church. Thanks.

[tborgal]

If this were me I would do all the payroll from one copy - probably church copy - of PC. This way you could do your 941 reports off of that copy. Doing the payroll from two different copies will make doing your 941 report difficult and will need to be done by hand. The church could then let the school know how much money needs to be transferred over to the church account at the end of each pay period to cover both the payroll and taxes.
Just my opinion, but I would definitely talk to your CPA about this. As Neil says. The best solution to this is a separate tax ID for the school. You also may want to check with PowerChurch to be sure you do not need to purchase a second license for the school.