Areas of Focus for Franchise Business Owners’ Year-end Planning
As the end of 2017 draws near, year-end planning comes to the forefront. Owners of franchise businesses may have many year-end tasks as they close out this year and plan for the next, including:
- Review of employee benefit programs such as health insurance and retirement plans
- Review of employee compensation levels, particularly if your state and/or local jurisdiction will increase their minimum wage rate in the upcoming year
- Equipment needs for the coming year
- Time off policies
- Updating employee information
The end of the year is the ideal time to consider how you might reduce your tax burden for the current year, and what changes you may want to make to better prepare your business for the coming year
Areas needing attention at year-end
Employee benefits – health insurance and retirement plans
Many group health plans renew on Dec. 1 or Jan. 1, so you'll want to work with your agent, broker, or vendor to complete open enrollment and establish benefits for 2018. Ensure that:
- All enrollment forms are submitted and processed;
- Employees receive new member ID cards; and
- All waivers for coverage are signed and filed.
Keep in mind that a company must establish pre-tax plans such as flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs) before the new year. As 2017 winds down, make sure that you've processed all enrollments. Learn whether any of these plans have grace periods or carry-over options so you can guide employees appropriately.
If your franchise offers a 401(k) plan or other retirement vehicle, check that enrollment forms and contribution changes have been submitted and processed, and that all beneficiary designation forms have been signed and filed.
Note that safe harbor plans require you to make any changes before Dec. 1.
If you match part or all of workers' contributions to retirement plans, use the end of the year to decide whether you want to change the match amount.
Employee compensation and overtime
Your state and/or local jurisdiction may be increasing their minimum wage rate in the upcoming year. Be sure to check on this for continued compliance.
Despite periodic headlines during the past year about changes to the federal overtime rule, employers still need to comply with existing federal overtime regulations, as well as applicable state and local requirements that may incorporate salary levels exceeding the federal level.
If your franchise requires new machinery, furniture, or other items, you might gain tax write-offs by buying and using them now, rather than in the new year. You can take write-offs for equipment purchases even if you finance them partly or fully. An accountant or financial advisor can help you settle on the best option.
If your franchise has a paid time-off policy, know whether your policy permits staff to opt for a payout of unused leave at year-end as permitted under state law. Be sure to inform employees of any deadlines.
Updating employee information
Do you have accurate and current employee addresses in your payroll system? Addresses on file dictate where you'll mail W-2 forms. Invalid addresses could mean delays in employees receiving their W-2.
Year-end means attention to business details
The end of the year for all businesses, including franchisees, calls for stepped-up attention to myriad details related to the business. Thorough recordkeeping, understanding of benefit plan changes, and knowledge of the latest state and federal employment regulations can help ease the burden as you prepare for year-end. Remember, you can always turn to Paychex if you have questions.