I’m a small business owner and I have been managing my own payroll. Are there any tips you might have for me as we approach the end of 2016?
Managing payroll at the end of the year can be rather overwhelming. There’s a lot of information you have to get in order, but if you keep yourself organized (and calm), you can get it done easily. Here are 5 key things that I always tell people to be mindful of as December 31 approaches:
1. Make Sure Your Records Are Correct
Look over all of your payroll data from the past year. Be aware of all current and terminated employee’s wage and benefit information. To avoid any penalties, you want to make sure you have all employee’s names, addresses, and social security number correct. Even the slightest discrepancy will result in the IRS penalizing you.
2. Get Your Forms Ready
Make sure your W-2, W-3, and 1099 forms are ordered as soon as possible. You have until January 31 to file your employees’ W-2, W-3 forms to the Social Security Administration, but it’s smart to get them done as early as you can. If you had any independent contractors working with you, and they were paid over $600, they need to be provided a 1099 prior to January 31. If you print your own W2s in your office, be sure that your software is all up to date for the current year. It’s also a good idea to run test samples.
3. Review All Changes Made Throughout the Year
There were a few legal and rule changes in 2016, so it is vital that you address any of them with your payroll department. Double and even triple check that you have complied with all changes, especially regarding HSAs, employee benefit accounts, and 401ks.
4. Pay Out Bonuses
Some companies pay an end-of-year bonus or holiday bonus in December. Make sure these bonuses have been scheduled and accounted for. It is important that they are taxed appropriately.
5. Close The Books
Issue all final paychecks and other payments for the year. Don’t forget to include any annual employee bonuses or expense reimbursements. Holiday and overtime pay can slip through the cracks, so be sure you include those as well.
If you go over a checklist like this at the end of the year, you should be in pretty good shape. Don’t forget that if you need any advice, or are considering outsourcing your payroll, Margos is here to hold your hand through the process. Our team knows first hand how overwhelming tax time can be, but with us on your side it doesn’t have to be. Call us anytime to make sure you’re all set for the end of the year.