As the year draws to a close, it’s crucial for employers to ensure that their payroll is accurate and up-to-date. This ensures not only compliance with local, state, and federal regulations but also helps maintain trust and good relations with employees.
Here is a comprehensive checklist to guide employers through this critical period:
1. Holiday Dates
Thanksgiving, Christmas Day, New Year’s Day – keep in mind that any bank holiday closures that could affect processing times and pay dates.
2. Holiday Payroll Submission Reminders
Notify the person or team responsible for payroll about the submission dates, especially if they’re different because of the holidays. Use automated reminders or digital calendar alerts to keep everyone on track.
3. Holiday Bonuses
Decide if you’ll be offering flat-rate bonuses or a percentage of the employee’s salary. Determine if bonuses will be taxed separately or as part of regular wages.
Bonus Request Form: Make sure there’s a clear system for managers or employees to request bonuses, including justification or criteria for awarding.
Deadline: Set a clear deadline for bonus requests to ensure they’re processed in time for the holidays.
4. Fringe Benefit Notifications
Inform employees of any fringe benefits that will be added to their W-2s. Ensure that any taxable fringe benefits, like personal use of a company car and SCorp owner health benefits, are correctly reported.
5. Minimum Wage Increase Notification
Stay updated with federal, state, and local minimum wage rates. Notify affected employees of any upcoming increases in their pay due to minimum wage adjustments. Verify employees coded as exempt will meet any new minimum wage requirements. Employees may need their wages increased or be changed over to an hourly employee.
6. Verify Your Name and Address
Ensure the company’s legal name and address is current in the payroll system, which is crucial for year-end tax document accuracy. Also have employees verify their address and SSN is correct in the system so they receive their W2 in January.
7. W-4/DE-4 Forms Notifications
Remind employees to update their W-4 or DE-4 forms if there were personal changes like marriage, divorce, or the birth/adoption of a child that can affect their tax withholdings. Anyone that claimed exempt will need to complete a revised form by February 15th or they will need to be set to S-0 in the payroll system.
8. Retirement Plan Limits
Confirm that employee contributions to retirement plans, such as 401(k)s, are within the annual limits set by the IRS. Notify employees if they’re nearing their contribution limits.
9. Update Time Off Policies
Review your leaves and any all-inclusive PTO policies you have to ensure that you will be in compliance after 1/1.
Closing up the year doesn’t have to be stressful. With a structured checklist in place, you can systematically ensure that all payroll aspects are accurately addressed. This not only ensures compliance but also assures employees that their compensation and benefits are in good hands.
Remember to always stay updated with current laws and regulations, as they can change from year to year. And if you are feeling confused, frustrated, or just like you could use some help, we’re here for you! Just give us a call.
Happy year-end planning!
