Posted By PayNW November 05, 2012
As we approach the holidays, our mind inevitably turns to the rapidly approaching year end. In the payroll world, of course, “year end” means much more than parties, streamers, and singing Auld Lang Syne with complete strangers. It also means extra work, shortened weeks, and the double whammy of prepping for Quarter End and Year End tax filings. Here are some things you can do to be better prepared for year-end payroll.
Preparing for Year-End Payroll
The intent here is not to depress you but to say that an ounce of preparation just might save you a pound of payroll pain. To that end, we offer you this little reminder of things you can do now to help ease that New Year payroll hangover:
Confirm Payroll and Federal/State Deposit Dates
The rash of holidays between now and year end wreaks havoc on banking and tax deposit dates. Plan shift check dates accordingly and be sure to let your employees know what to expect.
Schedule Employee Bonuses
Schedule bonuses and verify that you have included all bonuses in your employees’ wages before year end. Remember that all cash bonuses and gifts over $25.00 need to be included in taxable income. If your bonuses run large (and why wouldn’t they!) and generate a federal tax deposit of greater than $100,000, be prepared to make a tax deposit on the day after your pay date.
Review Employee Information
Review and correct, as needed, employee names, addresses, and social security numbers.
Gather Information for W-2 Reporting
Start to gather information on these often-forgotten items that need to be reported on W-2s:
- If you are a corporation, personal usage of corporate-owned vehicles by any employee
- If you are an S corporation, amounts paid during the year for your officer’s health insurance coverage.
- Third Party Sick pay
If you are a Multi-state employer, keep an eye on whether any of the states that you pay state unemployment for, fail to pay back their federal loans (Trust Fund Loans). If so, you will need to be prepared to possibly pay an increased FUTA rate on their 4th Quarter return retroactive to the beginning of 2012.
Check Paid Time Off (PTO) Balances
Be sure to Check your employees’ PTO balances and plans to use or get paid for unused balances
Prepare Your List of 1099 Recipients
Independent contractors who don’t do business as corporations and who are paid at least $600 in cash must receive a form 1099-MISC by Jan. 31, 2013. Don’t forget these potential recipients: outside lawyers and accountants, auto mechanics/service stations that repair company cars, equipment lessors and repair persons, and tradesmen like plumbers, electricians, tech consultants, or office cleaners.
Get Help Preparing for Year End
Year end can seem daunting, but with a little advance planning and steady progress, you won’t need to be singing the blues in January.