Employers may face a long list of financial, personnel, and regulatory wrap-up tasks as 2019 draws to a close. Paychex asked its experts to develop checklists to help you cover some of the bases and offer a year-end to-do list for taxes and payroll, benefits, compensation, and staffing.
Taxes and Payroll
- Ensure that all employees have current addresses in your payroll system. An invalid address could delay receipt of W-2 forms for some workers and create waste for your business with the printing and mailing.
- Verify all Social Security numbers or federal employer identification numbers (FEIN) because missing or incorrect numbers could result in a penalty by the IRS of up to $270 for each return of W-2.
- Any taxable cash or non-cash benefits – e.g., use of company car – must be included on W-2.
- Work with your accounting professionals to gather year-end tax documents for required tax filings.
- If your business doesn't already do so, consider establishing a secure online portal for employees to obtain their check stubs and W-2s. This will minimize labor and paper waste, and increase security of sensitive information.
- Many group health insurance policies renew on Dec. 1 or Jan. 1. Review coverage plans, hold enrollment meetings with employees, and discuss the Employer Shared Responsibility (ESR) provision of the Affordable Care Act — which requires companies employing the equivalent of 50 or more employees to offer affordable and adequate medical coverage.
- Gather payroll records if your workers' compensation policy mirrors the calendar year. The auditor will want to review payroll records in accordance with its policy period.
- If you plan to establish a flexible spending account, allowing employees to set aside pre-tax money for medical or dependent care expenses, your business needs to set up the plan and employees need to enroll before the new year.
- If your business bestows year-end discretionary bonuses, work with your payroll provider to issue the checks, either as a separate line item or in separate checks (additional bonus taxation may apply).
- If your applicable state or local minimum wage rate is increasing as of Jan. 1, ensure the updated rate is reflected in your employees’ pay as of the effective date. Also, with the new Federal Overtime Rule going into effect Jan. 1, 2020, that increases the minimum salary requirements to be exempt from overtime under the FLSA, you should consider identifying impacted salaried, exempt employees who are currently paid less than the minimum salary requirements and meet the applicable duties test. State laws may have additional overtime requirements.
- Wage base limits for taxes start over every Jan. 1. These include federal and state unemployment tax, Medicare, Social Security, and state employment taxes. Companies should be budgeting for the taxes they may not be paying now if employees have already met the wage base limits for 2019.
Staffing and Training
- If you have a self-service portal, remind employees to review their vacation, holiday, sick, and paid-time-off banks, especially if you have a “use-it-or-lose-it” policy (where permitted) or caps on carry-over amounts. If your business tracks this for employees, notify them about their balances.
- Check your company's severe weather and/or natural disaster policies, and have a business continuity plan in place in case weather or a natural disaster impacts your business operations at year-end and through the first quarter of 2020.
- Looking ahead, consider developing a calendar of required training for managers and employees, e.g., annual or semi-annual instruction regarding anti-harassment prevention, hiring practices, workplace safety, and effective management.
- The new year is a great time to review your employee handbook and incorporate new policies or updates.
Preparing now can better ensure your business will run that much more smoothly at holiday time and beyond. And remember: Paychex has a wealth of resources to assist you — including assistance with regulatory compliance, payroll, human resources, and time and attendance management.
- What Employers Must Know about IRS Enforcement of ESR Provisions
- U.S. Department of Labor Issues Final Federal Overtime Rule
- Business Continuity Plan: How to Prepare for Business Interruptions
- What Does Cyber Security Mean to Your Business?
*This material is for informational purposes only. It does not contain legal or tax advice. You should contact your legal counsel or your tax advisor if you have any questions or if you need additional information. Information is believed to be accurate as of the production date; however, it is subject to change.