The crisp air and changing foliage reminds us all that fall is here. Time for carving pumpkins, hot cider, apple picking and Payroll Year-End...Yes, it’s time to prepare for Payroll Year-End. October is time for many activities, including getting ready for the rest of next year. Don’t leave it until the last minute, now is the perfect time to prepare.
Suggestions you can do now to get ahead of the game:
- Employee Information: Did you have new hires this year? Verify employee information by confirming all SSNs are correct, employees with name changes are accurate, and any terminations or deceased employees are properly marked. If you use contract employees, remember to check them as well. Confirm your W-2 delivery preparations. Is this the year you go paperless? Validate contact information – i.e. physical addresses and\or email addresses & phone numbers, paying special attention to new hires and terms.
- Company Tax Information: While checking employee information, confirm your company tax information. Are you doing business in new states or local jurisdictions? You will need to confirm tax jurisdictions are setup with the correct legal information and valid tax IDs, and that all employees have the correct lived-in and taxed-in locations.
- Other Tax Items: Get a head start on wage and tax data confirmation. Pay special attention to those items that often lead to adjustments such as Group Term Life as well as unique employee scenarios such as Deferred Compensation. Other tax items that should be validated include Third Party Sick Pay, Taxable Fringe Benefits and Equity transactions. Also look at outstanding severance agreements and any employee overpayment recovery opportunities.
- Banking Reconciliation: Complete year-to-date banking reconciliation to identify outstanding checks, and update your payroll system with all reversals if needed, as well as manual and voided checks ensuring employee totals are correct. Pay particular attention to any Escheat requirements.
- Payroll Calendar: The current payroll calendar was established earlier, but verify the impact of holidays for the remainder of the year. Review the impact of Thanksgiving, Christmas and New Year’s holidays. US bank holidays will have an impact on your payroll calendar. Verify this was all taken into account when the calendar was established and adjust your pay calendar and employee work schedules accordingly. Also, schedule any off cycle payrolls including Bonus Payrolls or Year End Adjustments. Be prepared to have all totals updated by the end of the calendar year to avoid possible penalties and interest due to deposit and filing deadlines for taxes. Building your plan now will ensure you don’t run into resource and process scheduling issues later. This is also a good time to set the payroll calendar for next year.
- Healthcare: Validate your Affordable Care Act (ACA) compliance reporting. This can be a moving target in today’s political climate but best to be prepared. The ACA requires employers with 50 or more full-time equivalent employees to report health coverage information to their employees and the IRS annually.
- Tax Filing: Get educated on W-2 changes; each year the IRS makes changes to their instructions for filing. Pay particular attention to last-minute legislation changes coming from the IRS. You should closely review the IRS.gov web site for details. The American Payroll Association and your Payroll provider are also good sources of information.
The best approach to ensure your Payroll Year-End processing is successful, is to treat it as a distinct project, with typical project controls. Establish and confirm project scope and schedules with external providers and internal contributors. Define task and project timelines, and establish communication plans so employees are aware of important dates (like when personal contact information needs to be updated). Then manage the plan.