Nonprofit Bookkeeping & Accounting For Dummies, 2nd Edition

Chapter 15

Accounting for Payroll and Payroll Taxes

IN THIS CHAPTER

Creating payroll accounts for employees

Calculating federal, state, and local taxes

Paying quarterly payroll taxes

Submitting IRS payroll requirements

Reporting info about contract employees

You’re the executive director or manager at a small- to medium-size nonprofit, so you may assume that because of your organization’s nonprofit status, you don’t have to pay any taxes. After all, your status means your organization generally owes no corporate income taxes. However, you’re still responsible for withholding federal and state payroll taxes for your employees.

As an employer, you’re required to remit state and federal payroll taxes on behalf of your employees and any employer portion as well. If you previously ran payroll in the for-profit sector, the good news is accounting for payroll and payroll taxes for nonprofit employees is quite similar.

It’s easy to set up your organization’s payroll accounting yourself. ...