Re: Paid Staff

**&* P* <m*@rachel.org>**

Hi,

The reason the resource center recommended you talk to a lawyer is that
there are stiff IRS penalties (and possibly state ones as well) if you go in
the wrong direction.

The IRS has a test that you can go through to decide whether or not someone
is a contractor.  See
http://www.irs.gov/charities/article/0,,id=128602,00.html and I suggest you
follow the links.  If you pay someone as a consultant and the IRS determines
they were an employee you will owe back taxes as well as a penalty.

If you decided to pay them as staff, you will need to get an employer
identification number, from the IRS) as well as set-up as an employer (with
the IRS, your state, and possibly you city or county -- that depends on
local law).  Your organization will have to pay half of the social security
and medicare tax and possibly some/all of unemployment as well.

You might want to talk to a non-profit accountant who will give you a
straight story about your situation.  I always review my employer /
contractor choice with the organization's accountant.

Lastly you probably should carry liability and workers compensation
insurance as well.  You open your organization and its board up to problems
if a lawsuit occurs.

I am happy to answer any of your questions to the best of my knowledge.  I
have been working in the non-profit world for almost 20 years and know from
experience that it is easier (though more costly in the short run) to follow
the rules than it is to pay for it in the long run.

-- Maria

===============================
Maria B. Pellerano, Associate Director
Environmental Research Foundation
maria@rachel.org
phone: 732-828-9995

----- Original Message ----- 
From: "Chun, Stacie" <SChun@oaklandnet.com>
To: <community_garden@mallorn.com>
Sent: Wednesday, November 17, 2004 2:33 PM
Subject: [cg] Paid Staff

Our community garden has been awarded a small foundation grant ($8K) to hire
a program coordinator. We might be able to get a little more from another
grant to bring the total available up to about $18K.

We haven't had paid staff for the gardens in the current board's memory and
aren't sure how to get started-- what taxes, insurance are required? Can we
pay on consultant or stipend basis? Are we required to pay Medicare,
unemployment insurance, etc. on such a small sum?

Our funder doesn't want to advise us on set-up, and the local non-profit
resource center has advised us to find an employment lawyer.

Does anyone have experience with paying a person out of a tiny budget? We
are in California, so any experience in our state would be especially
helpful. Do we really need to hire a lawyer for this?

Stacie Chun
Hayward Community Gardens

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To post an e-mail to the list:  community_garden@mallorn.com

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