Blog: Paycheck Fundamentals

Church payroll contains a genuine anomaly: a minister is treated as an employee for income tax purposes and as self-employed for Social Security purposes, simultaneously, for the same compensation. That dual status drives nearly every distinctive rule in this area, and misunderstanding it produces the most common errors.

Everything else — the housing allowance, the withholding treatment, the exemption elections — follows from that starting point.

Dual Tax

The most consequential misunderstanding in nonprofit payroll is contained in the word "exempt." Tax-exempt status relieves an organization of federal income tax on its exempt-purpose income. It does not exempt it from payroll taxes, and a nonprofit that assumes otherwise accrues trust fund liability with personal exposure attached.

What genuinely differs is narrower and more specific than the general assumption, and knowing exactly where the differences sit is the ...

There is no federal paid sick leave requirement for private employers generally. Everything in this area is state and local, the rules differ on nearly every variable, and a meaningful number of cities and counties have their own ordinances that layer on top of state law.

For a multi-jurisdiction employer this produces the hardest compliance problem in the leave area — not because any single rule is complex, but because there are dozens of them and ...

Compensatory time off in place of overtime pay is one of the most common wage-and-hour violations in the private sector, and it is almost always committed in good faith. A manager and an employee agree that an extra four hours this week can be taken as time off next week. Everyone is satisfied. It is unlawful.

This guide explains why, what the narrow permissible variations actually are, and what to do instead.

The Rule for Private Employers

Under the Fair Labor

Every payroll professional can recite the formula: gross pay minus taxes minus deductions equals net pay. Almost none of the errors that reach a courtroom or an audit report come from that formula. They come from the four judgment calls buried inside it — what counts as gross, which wage base each tax uses, in what order deductions apply, and where the legal floor on net pay sits.

This walkthrough builds a complete gross-to-net calculation from scratch, with a worked example, and ...

Payroll looks simple from the outside: hours in, paychecks out. Anyone who has actually run a payroll cycle knows better. A single pay period touches wage and hour law, federal and state tax withholding, benefit deductions, garnishment orders, deposit deadlines, and recordkeeping rules — and every one of those has its own penalty attached for getting it wrong.

This guide walks through the entire payroll process in the order you actually perform it, with the compliance checkpoints ...