Workers’ Comp Codes (part 2 of 3)

Posted on September 23, 2016 Written by

2016 05-May 31 (12)

Most churches have two different types of employee classifications for WC purposes:

  • Professional staff (aka, clergy and office workers); their WC code number is 8868
  • Other staff (janitors, food service, and maintenance); their WC code is 9101

 

WC insurance assigns premium rates to each employee classification depending on the type of work on their potential injuries and severity. For instance, office staff and clergy do not engage in typically dangerous activities so their premiums are pretty low. However, kitchen staff use knives, ovens, and slicing machines; custodians use vacuum cleaners, ladders, and heavy equipment.

 

Insurance premiums are charged per $100 of income based on the employees’ actual wages as reported on the W-2. Many WC insurance companies will perform a spring time audit of W-2s and use that information to retroactively correct the prior year’s total premium. If they charged too much, they’ll send a refund and if they charged too little, they’ll send an invoice. The premium for code 8868 is in the range of 30 to 40 cents per $100 of income. The premium for 9101 is about $2.50 per $100.

 

There is a third code which affects some churches, 8869. This code covers child care workers and it has a rate of about 60 to 75 cents per $100. Working with children, especially their poop and their biting can be dangerous to employees. Remember, WC does not cover the children, only the employees.

 

Lead On!

Steve

 

Filed Under: budget, buildings, church administration Tagged: , , ,

Workers’ Comp Insurance – a primer (part 1 of 3)

Posted on September 16, 2016 Written by

2016 05-May 24 (5)

Workers’ Compensation Insurance is legally mandated for employers. In Virginia (and probably in most US states) it is required for all employers with more than two employees. That means that ultra-small employers (like mom & pop companies) do not need WC insurance but everyone else does.

 

WC insurance covers the medical expenses of employees who are injured or killed while working. It pays for most work-related injury expenses. However, I have seen work-related accidents which were determined by the insurance company to be non-work-related.

 

When a person goes to the hospital with an injury, especially the emergency room, one of the questions is, “Was this caused by a workplace accident?” This question should always be answered truthfully – never try to protect an employer from claims or insurance price increases by lying about the nature of the accident. Employers must encourage their employees to claim WC insurance especially on injuries which could cause chronic pain or prolonged recovery. Those long-term consequences can be expensive if the employer or employee pay for them.

 

WC insurance is obtained from the insurance company which handles the employer’s property & liability insurance. It is typically not expensive and it is based on several factors:

  • The work performed by the employee
  • The employee’s actual wages
  • A discount or premium charged based on prior claim history

 

After the terrorist attacks on the US on September 11, 2001 the insurance industry lobbied Congress which permitted a non-negotiable terrorism fee which is assessed on all WC policies.

 

Lead On!

Steve

 

Filed Under: budget, buildings, church administration, church finances, church safety, facilities Tagged: , , , , ,

Stock Gifts (part 3 of 3)

Posted on September 2, 2016 Written by

2016 05-May (10)

Several times during the year it is a good idea to place in the Sunday bulletin, the quarterly donor gift statement, or other form of communication a reminder that people can give stock to the church. Below is the bulletin “blurb” which I use regularly.

 

Many members of (insert church name) donate appreciated stock. They give to the ministry budget, to missions’ offerings, the church’s endowment, or the building campaign. You can transfer your stock electronically to (insert church’s name)’s account by contacting (insert church’s broker) at (insert brokerage name and phone number) or (insert church contact) in the church office (insert church phone number). To give electronically, your broker will need a DTC number (insert number) and the church’s account number at (insert account number).

 

Lead On!

Steve

 

Filed Under: accounting, budget, church finances, generosity Tagged: , , ,

Stock Gifts (part 2 of 3)

Posted on August 26, 2016 Written by

2016 04-April 26 (9)

When stock is donated, it must be acknowledged by the church. It can be posted on the person’s giving record so that there is permanent record of the gift. It is also an excellent practice to send the donor a separate letter with the details of the transaction. Below is a sample letter which I use regularly.

 

Mr. and Mrs. John Smith

1234 Maple Ave.

Hometown, US 12345-6789

 

Dear Mr. and Mrs. Smith:

 

Thank you for your contribution to Grace Family Fellowship. Your gift of stock was:

 

Name of stock:……………………………………….. Apple, Inc. (AAPL)

Number of shares:………………………………….. 25 shares

Date of transfer:…………………………………….. January 3, 2018

Stock high on date of transfer:…………………………… $412.50

Stock low on date of transfer:……………………………. $409.00

Average value per share on date of transfer:………. $410.75

Total value of contribution:…………………………… $10,268.75

 

Fund contributed to:

  • 2018 Operating Ministry Budget

 

The date of transfer is the date on which the stock was transferred to Grace Family Fellowship. The IRS requires that stock gifts be valued at the average of the high and low of the stock on the date of transfer. Grace Family Fellowship sells all stock gifts immediately. The cost of the commission and fees related to the sale is netted from the value of your gift.

 

For IRS purposes, I must inform you that the gifts contained in this letter are based on intangible religious benefits. You did not receive any goods or services from Grace Family Fellowship for this contribution.

 

Thank you again for your gift. Your continued support of the ministries of Grace Family Fellowship is greatly appreciated. If I may be of further help please let me know.

 

Sincerely,

 

Church Administrator

 

Lead On!

Steve

 

Filed Under: budget, church administration, church finances, generosity Tagged: , , ,

Stock Gifts (part 1 of 3)

Posted on August 19, 2016 Written by

2016 05-May 10 (2)

Virtually all stock in the US is common stock. There are lots of other kinds of stock (preferred, private, etc.) but common stock is typically what is traded on the major stock exchanges. Almost all stock is now held in “street accounts” or an electronic account in a brokerage. Paper stock is available but it is cumbersome to transfer so most people use electronic stocks. For purposes of this post, stock gifts include mutual funds.

 

Stocks which have increased in value since their purchase are an excellent way for members to make gifts to their church without incurring tax consequences. Churches can accept paper stock gifts without having an account with a stock broker. However, only brokerage firms with selling rights in a stock exchange (think NYSE, New York Stock Exchange on Wall Street) can sell the stock. Churches without an account with a broker cannot accept electronically transferred stock from a member’s street account.

 

Churches which may get stock gifts should be pro-active and establish a brokerage account. This will require the authorized body of the church to approve a required corporate resolution (the wording is provided by the brokerage firm) which authorizes specific people in the church to sell stock. Typically the people who are named on the resolution are the church’s treasurer, chairperson of the Finance Committee, and the staff person responsible for the church’s finances.

 

Once the account is established and the resolution is approved, then the church can accept and sell donated stock without much trouble. All stock gifts must be acknowledged by the church and there is a specific way to value stock gifts.

 

Lead On!

Steve

Filed Under: accounting, budget, church administration, church finances, generosity Tagged: , , ,

IRA Gifts

Posted on August 5, 2016 Written by

2016 05-May 31 (9)

In December 2015, the US Congress made permanent a tax break that benefits older donors: the ability to gift to a charity funds directly from an IRA (Individual Retirement Account). There are several rules for this:

  • Donors must be 70.5 years or older
  • IRA gifts cannot exceed $100,000
  • Gifts must go to a 501(c)(3) – FYI: the IRS considers all churches in the US to be 501(c)(3)s.

 

There are some interesting nuances to IRA gifts:

  • The IRA transfer does not show up in the donor’s income but it does meet the mandatory RMD (required minimum distribution) of IRAs
  • The church must provide an acknowledgement letter to the donor but the IRA gift does not show up on the donor gift statement from the charity. The reason is that because this IRA amount doesn’t show up on the donor’s Form 1040 under income, it can’t show up on the Form 1040 as a contribution (this prevents double-dipping).
  • Checks sent to churches from an IRA sometimes do not have the name of the donor on it. The church will need to research who the donor is in order to send an acknowledgement.
  • This gift will benefit some donors more than others. Thus, it is in the interest of the donors to consult their tax or accounting professional to determine if this will help their individual situation.

 

Churches will be wise to encourage IRA gifts from eligible donors. The following text can be included in the Sunday bulletin during the year.

  • The IRS permits people to give from their IRA (Individual Retirement Account) directly to the church. This transfer can be a significant tax advantage. Please consult your tax or accounting professional to see if you should make a gift from your IRA to the church.

 

Lead On!

Steve

Filed Under: budget, church administration, church finances, generosity Tagged: , ,

Monthly Internal Audit Checks

Posted on February 16, 2016 Written by

WTER880LH2

I encourage all my clients to have an annual audit. You can find reasonably priced audit firms who will also provide assistance throughout the year with tricky questions.

In addition, I encourage my clients to have an Internal Auditor, typically the church’s treasurer if they have a financial assistant doing the books (or the Finance Committee chairperson if the treasurer is doing the books).

The procedures the internal auditor does each month are quite simple:

  1. After the month ends, the internal auditor receives the general ledger detail for the checking account. That lists every payment and deposit.
  2. The internal auditor will review the list and select up to 10 deposits and/or withdrawals for which he would like to have more information.
  3. The Finance Assistant finds the source documents for the requested deposits or withdrawals and has them in a folder in the church office for the auditor to review. These documents should never leave the church; the auditor can review them onsite.
  4. The auditor make notes and, if necessary, talk with the staff person or supervisor if there is an expense or receipt for which he needs further clarification.

That’s it. It is very simple and it is done every month. Church staff will be informed that every one of their expenses is subject to a random inspection and that will ensure they attach appropriate documentation and in a timely way. It also provides a sense of lay member oversight so that the church can know that there is someone “guarding the guards.”

The monthly bank reconciliation summary should also be sent to the treasurer. This is done to provide more detail about checks and deposits that cleared or haven’t cleared.

 

Lead On!

Steve

Filed Under: accounting, budget, church administration, leadership, strategy Tagged: , , , ,

Wills for New Parents

Posted on February 9, 2016 Written by

8Z2QWLCH72

My wife and I have had two babies. All that we thought about for months and even years was having enough diapers on hand and getting enough sleep. Seems like we constantly ran out of both. New parents are usually overwhelmed with all the needs and their desire to do everything correctly.

There is one thing that very few new parents ever think of: getting a new will. When you have a baby, your legal status changes because you are now guardians of another human. You have assets to distribute in the event of your death and you need to find someone to care for your child(ren) in the event both parents die before the kids turn 18. There’s a LOT to think about legally when you have a baby but this occurs to almost no one.

What if members of the church who are attorneys met with the couple and drafted a very simple will. I know that some wills can be done online but I can assure you that there is nothing like talking to a person to craft your will, especially for new parents. Having a “Wills Ministry” can provide an opportunity for church members to help (and get to know) other members of the church. If the couple has a more complicated legal status, the lawyer can help them negotiate that in a paid-for will.

Doing this for new parents tells the parents that the church is concerned about them and their new addition. It also communicates to attorneys that there are ways for them to be of professional service even in their own church.

 

Lead On!

Steve

Filed Under: accounting, budget, church finances, leadership, strategy Tagged: , , , ,
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