Legal Question in Business Law in California

Re: salary for non-profit corp

The basic document you need is IRS Circular E (Publication 15), Employer's Tax Guide.

Payroll, employment and withholding law and regulations for non-profit corporations are almost identical to those for ordinary business corporations. One difference is that 501(c)(3) organizations have an alternative method of handling their California unemployment insurance (UI). There also may be exemptions for certain employees from UI and SDI (state disability insurance). Obtain the following from the California Employment Development Department: (1) Form DE 1SNP; (2) Form DE 231NP; and (3) Form DE 231 EC.

There are a few other widely-scattered laws and rules regarding 501(c)(3) employees, e.g. you may have greater and/or different options for creating fringe benefits packages.

Re: salary for non-profit corp

As far as I know, the IRS makes everything intended for public consumption available on its Web site. The only thing you can't get is consistently good advice.

I will check withholding, etc. rules in the morning and try to get you a supplemental answer.

Re: salary for non-profit corp

Thank you for your inquiry and posting.

As a corporation, even a non-profit corporation, you are still responsible for employer withholding at both the federal and state tax level. Remember, tax paid to employees is income to them, and is subject to withholding. You must pay quarterly payroll taxes to both the state and federal government, and the individual's withholding is set by their W-4 form, filled out at employment, setting their exemptions for withholding purposes.

Generally, employers who withhold income and social security taxes file Form 941, Employer's Quarterly Federal Tax Return. Exceptions to this rule include:

Individuals who employ domestic workers and domestic farmworkers to perform services must file Schedule H with their individual tax return;

Employers of agricultural workers must report withheld taxes on Form 943, Employer's Tax Return for Agricultural Workers; and,

Nonpayroll taxes are reported on Form 945, Annual Return of Withheld Federal Income Tax (includes taxes withheld on gambling winnings, retirement pay for service in the Armed Forces, pensions, annuities, and IRAs).

You can find the 941 form, a withholding calculator for payroll, and more detailed instructions at the IRS website, www.irs.gov/forms.