As if the holidays and party plans don’t make the end of the year stressful enough, business owners and HR departments have the added pressure of preparing for payroll year-end. Ensuring payroll and tax obligations are met can be overwhelming, but here’s a quick checklist you can use as a reference to help keep you informed and organized during this potentially chaotic time.
- Get Employee Information in Order
Did you hire any new employees this year? Were there any name or addresses changes? Have all terminations been properly marked? Are you positive all workers’ Social Security Numbers (SSN) are accurate? Make sure this information is accurate for W-2 purposes. You don’t want to deal with adjustments (or penalties) after they have been filed with the government.
- Process all Manual and Voided Checks
Be certain that all manual checks your company cut over the year have been accounted for. Also, you should confirm that any voided checks have been recorded. This does not include uncashed checks, though; those should be reported to the appropriate state agency as unclaimed property.
- Review Contribution Limits
Be sure you know the limits for 401(k), 403(b), or any retirement plan your company provides, as well as Social Security and HSA contributions. This will help to ensure that your employees stay within the limits, or if they are in danger of exceeding them, this gives them time to make any necessary adjustments.
- Alert Employees About Unused and Expiring Benefits
Does your company have a rollover policy regarding vacation days, sick time, and personal leave, or does unused time expire at the year’s end? Remind your employees as soon as you can about expiring PTO so they can schedule time off before the new year hits. And the sooner the better, so you minimize the chance of business operations being disrupted by a flood of requests.
- Sign Up Employees for New Insurance Plans
While insurance enrollment isn’t directly related to payroll, payments of any plans you’re offering does have an affect. If you are offering new health, life or other kind of insurance plans in your company, or if new employees interested in signing up for your existing plans, be sure enrollments are completed before the end of the year.
- Process Your Quarter-End and Year-End Reports
Report income and withholding amounts to all employees as well as ex-employees who worked during the calendar year using the W-2 form. Independent contractors and other payees should be sent 1099s. The Employer’s Quarterly Federal Tax Return (Form 941) is usually due by the last day of the month after the end of the quarter.
- Update Payroll Software
What kind of payroll software do you use? Is it up to date? Does it have all the latest features? Now is the time to update your payroll software to protect the critical and confidential information you have stored. It also wouldn’t hurt to run a test year-end report in order to identify any errors.
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