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. 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 your 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 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 and correct, as needed, employee names, addresses and social security numbers.
- 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 to 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 your employees’ paid time off balances and plans to use or get paid for unused balances
- Make sure you are armed with information for 2013 as it becomes available including Social Security wage bases, 401(k) pretax limits and state unemployment/disability wage bases (depending on the state).
- 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, tradesmen like plumbers, electricians, tech consultants or office cleaners.
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.