Non-Profit Community Theatre Questions

[colorsblend]

Posted: 5/15/17 at 11:49am

I am on the board of a local non-profit Community Theatre. We pay all of our crew and musicians stipends, but there has been discussion lately about if all of these people need to actually be considered "employees". We do three productions a year and it's not always the same people working on the shows. We give 1099s to anyone who makes over $600. How do other small theatre companies handle this?

We also used to have an Executive Director that made less than $800 a month and had an Independent Contractor contract. We are looking into hiring a new one, but again it seems it would actually need to be considered an employee position. 

I've googled plenty, but I wanted to hear what other theatre companies do about this.

[trentsketch]

Posted: 5/15/17 at 12:06pm

As someone who gets paid by various theaters as a musician and/or a technician, I think what you're doing sounds about right. I get handed 1099 forms to fill out if I'm making more than $600 in a year. Otherwise, it's a cash under the table deal for a couple nights' work. 

At most, if the worker isn't on a year-round staff, they're a contract employee. If you have permanent members who work on every show, you could technically consider them employees. Frankly, if you're only doing three productions a year, I don't think you need to have that discussion about anyone who isn't working on your shows year-round. 

Someone else might have a better understanding of running the business end.

[AEA AGMA SM]

Posted: 5/15/17 at 12:58pm

There are a number of sites where you can view the 990s of non-profit organizations (those are all considered public record). It might be worth looking through to see if you can find a company that is similar in size and scope to yours and look their 990s to see what they've been doing for a frame of reference.

[Yero my Hero]

Posted: 5/15/17 at 12:59pm

I run a small nonprofit community theater in my town. In my day job, I am the Director of Finance and HR for my company, so I think I can help provide some insight.

 

There are IRS guidelines to help determine who is an employee and who is an independent contractor, but there are a lot of jobs in theater that don't fall neatly into one or the other, and that has caused problems at some professional companies I have worked at.

 

Normally, musicians and tech crew would fall into the employee column for a few reasons, but most small theaters like yours pay them as independent contractors and only report if it is over $600. The community theater I am involved with does the same thing. It is not enough money at your company for the IRS or Department of Labor to care about, so you should be safe if you continue to do what you have been doing. Taking on employees is a huge burden on a small company, because it means paying payroll taxes, providing unemployment and workers comp coverage, and other infrastructure that just isn't there.

 

On the rare occasions my theater company has to pay an employee, like when we do an Equity guest contract, we go through a third-party payroll provider, but that is not feasible or reasonable for more than a couple weeks a year.

Updated On: 5/15/17 at 12:59 PM

[Liza's Headband]

Posted: 5/15/17 at 1:06pm

Some states have actually ruled on this. Others haven't. Some have strong opinions on this. Others don't.  It all depends on who you talk to.

 

Many will say the musicians, technicians, etc., MUST be classified as Employees. Others will say they shouldn't or don't really need to be.  

 

At the end of the day, you're best consulting a tax attorney and going with their determination.  It is a very, very, very gray area (as Yero eluded to).  Good luck 

[JSquared2]

Posted: 5/15/17 at 2:26pm

You should really be consulting a CPA with these type of questions --- not a bunch of anonymous strangers on an internet chat room.  After all, you'll be the one on the hook for any IRS fines/penalties --- not them.  Not They may be well meaning, but 99.9% have no clue what they are talking about.

[colorsblend]

Posted: 5/15/17 at 4:08pm

Thank you, everyone, for your responses.

I will also be asking our CPA, but I wanted to hear from actual theatre companies before I start asking questions.