Can a non-profit set up a Square Payroll account in Texas without a TWC account?

[Tnealegm]

We are a small non-profit based in Texas.  As such, we are not a "liable employer" with the TWC.  They will not set up an account for us, because we will not owe any taxes.  How do we set up payroll with you without a TWC account?

[VanKalkerFarms]

I'm not a tax professional but if you're employing people you still have payroll taxes and unemployment.  With my quick googling it seems like unemployment is needed, but I'm not from texas so I'm sorry I don't know the answer.

Square payroll I'm assuming needs the unemployment information because people need unemployment taken out.  Not sure if this can be bypassed if, in fact, you don't need a texas unemployment account.  

Hopefully, someone from Square payroll sees this post and can help you.

[Tnealegm]

Thanks for the input.  According to the US Federal Unemployment Tax Act (Title 26, Sec 3309(C)), Non-profits which are IRS 501(c)3 certified, and have fewer than 4 employees, are exempt.  Texas follows the federal law in this regard and so we are also exempt from state unemployment tax, unless we volunteer to become "liable" in which case we would have to pay tax.  That's the only way we can have an account with the TWC.  Square doesnt seem to allow for this exemption in thier online signup.  Thats why I am asking for some help.

[VanKalkerFarms]

ah, I did see that 4 or less exception, but just assumed there would be more than 4.

I'm going to go back in my replies because I know someone from Square payroll support commented on another thread.

[VanKalkerFarms]

found it.

@AWH any advice to help them out?

[Sean · Accepted solution]

Happy to chime in here.  You must have a Texas Workforce Commission (TWC) Tax Account Number to sign up with Square Payroll. To get one, you must be a liable employer. A liable employer has to meet any one of the criteria listed here. Prior to meeting those requirements, you can choose to become a liable employer by communicating to the TWC that you are paying wages to a Texas employee and wish to become liable for unemployment tax even though you may not currently meet the criteria.

If you communicate this to the TWC, they should allow you to establish an unemployment tax account, obtain a TWC Account Number, and get your State Employment Insurance (SUI) tax rate. You can call the TWC at 512-463-2731 to become liable or if you have additional questions about registration.

You can check out our article on Texas Employer Tax Information for more information.

[Tnealegm]

I appreciate your reply.  Unfortunately for us, and every other small non-profit in Texas, that is not a viable option.  Why would we volunteer to pay taxes we dont owe just to sign up for a payroll service?  We will have to use some other service or continue to do it ourselves.