End-of-Year Payroll Checklist
As the end of the year approaches, it's important to make sure that your payroll information is up to date. From end-of-year reporting and taxation to preparing for 2016, there are numerous steps that can help keep your information organized and accurate. Here is a closer look at a high-level checklist that business owners and payroll managers can use:
- Ensure that contact information for all employees is up to date, including phone numbers and mailing addresses. Check for missing or invalid social security numbers. There can be penalties associated with incorrect information. Having the wrong address on file can also create difficulties in mailing out Forms W-2, Forms 1099, and other forms.
- Determine when employees should have the "retirement plan" indicator for box 13 of Form W-2.
- Verify that you have up to date and accurate taxation documentation on file for all employees for the previous year.
- Ensure that all information which needs to be filed in compliance with the Affordable Care Act is completed.
- Have any employees died in the last year? If so, deceased employees need to be coded correctly in your payroll system.
- Review your employee data for individuals that have left the company during the past year. Determine whether those employees have zero balances for categories such as vacation time, sick time, and loans. Correct any issues in the final payroll of the year.
- Update your records for any employees that have left the company to be removed from the system as the 2016 payroll framework is created.
- Review wage, tax, and withholding information for categories such as: bonuses, other compensation, group life insurance, business expense reimbursements, taxable fringe benefits, tips, and any other benefits/compensation categories relevant to your business. If appropriate withholding has not been made, ensure that this is corrected by the final payroll of the year.
- Schedule special payrolls needed, such as for seasonal bonuses or annual bonuses.
- Create a list of year-end reporting needs; if required, communicate those requests to your payroll provider along with deadlines.
- Audit payroll supplies, such as blank checks required, if you handle these issues in-house.
- Ask current employees who will remain with the company in 2016 to update their Form W-4 if required.
- Balance the books to ensure that any manual or voided checks are properly reflected in the accounting statements.
- Verify Earned Income Credit (EIC) reporting, if applicable.
- Review state regulations related to unemployment insurance and disability insurance taxation rates.
- Complete reasonableness of withholding for categories such as: social security, Medicare, state unemployment and other categories. Make adjustments as necessary.
- Verify compliance for contributions to all plans such as: retirement plans, health savings plan, and childcare plans. Ensure that all administration and reporting is complete. Check for excess contributions.
- Schedule payroll dates, reporting, and monthly/quarterly/year-end close dates for the fiscal year ahead.
With a bit of advanced planning, your year-end payroll planning can help your reporting, compliance, and paperwork from the previous year go smoothly. It's also critical to laying the foundation for a successful fiscal year in the months ahead. Finally, always schedule time with your payroll provider or representative to ensure that there are no outstanding issues that need to be resolved by December 31 or put in motion for the year ahead.