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Yep – It’s Time for Year End Prep…Already!
By VICKY BROWN
I know, I can’t believe it either – it seems too soon. But the fact is, that now is the perfect time to start putting your year end HR tasks in order.
And yes, there is lot’s to do – so let’s get right to it.
First up is the ugly elephant in the room – taxes. Oh sure, there’s your personal taxes, and the company’s taxes – but the taxes I’m concerned about are payroll taxes. For you, and your employees.
Let’s start with you. Throughout the year, you were hopefully reviewing the quarterly payroll tax filings – you know the 941 for the feds, and the comparable filing for your state (in California, it’s the DE9). Now if you are working with a payroll processor, they most likely are taking care of the filings for you. But that doesn’t mean you’re off the hook.
Each quarter, when they send you your copies of the filings, you should take a look at the total paychecks for that quarter, and compare them against the tax filings. And here’s a pro tip – the numbers should be the same. And if they aren’t – then it’s a very good idea to run down the discrepancy.
And that’s why it’s good to do this each quarter – because if now is the first time you’re doing the double check; well that means you have 3 quarters to go through. And if you wait until the end of the year, and something doesn’t square, then you’ll have to look through 4 quarters.
Oh, and don’t forget that if something is wrong, it’s far easier to refile a quarterly tax filing than a tax filing for the whole year. So, all that to say – really try to stay on top of reviewing your quarterlies.
Now on the employee side – it’s also a really good time to remind employees to double check their withholding amounts. Generally they can find that on their pay stub. It will show for instance if they are set for Single, 2 exemptions; or Married 5 exemptions etc. And again, it’s better for them to catch this before (I say BEFORE) the end of the year.
There isn’t anything much worse than an upset employee because it’s March of the following year, and they just realized that their withholding amount for the prior year was all wrong and now they owe massive taxes. And, at that point it becomes a whole thing because they think it’s your fault for putting in the wrong numbers, and you have to dig up the original documents because you’re sure they submitted what you put in etc. etc.
Save yourself (and them) the headache. Tell them to double check it now. That way you still have some runway to make payroll adjustments on future checks before the year is done.
And while you’re asking them to check things – they should also double check their address on the pay stub, so you can make any adjustments now and ensure they get their year end W2s mailed to the right place.
“…are there any year end commissions or bonuses happening. If so, make sure you are clear on which paycheck they will hit. It’s so easy to say – oh, it will be December 31st. But if you process on the 31st, that payroll won’t hit until after the 1st.“
In most cases, the payroll company will send W2s directly to the employee’s home address – so it’s really important that the information is up to date in the payroll system.
And – still on the subject of money – are there any year end commissions or bonuses happening. If so, make sure you are clear on which paycheck they will hit. It’s so easy to say – oh, it will be December 31st. But if you process on the 31st, that payroll won’t hit until after the 1st. And even if you do process prior to the 31st, depending on when you submit, the payroll process may have a special deadline because of the year end crunch. So again – you may miss it and end up with a payment in the next year (which you don’t’ want).
My rule of thumb is to make sure everything is submitted and processed no later than the 25th – yep, Christmas. That’s the deadline in my head. That way I can be sure whatever payment is happening will count in the current year.
And one final thing about taxes – start gathering the new year tax forms as soon as possible. I generally like to do (what I call) a Tax Package in January or February. The package gets sent to all employees, reminding them that if they want to update their withholdings, they have to complete the form and return it. I also include the Earned Income Tax Credit notice. This notice has to be provided within 1 week of distribution of the W-2s for the year.
Now, most times your payroll company will include it with the W2s. But I think it’s a good idea to send it with the tax package as well – just to be sure you’re covered. Oh, and be sure to double check – your state might have a required notice too.
Now on to the policies. This can be a bit tricky, because state and federal legislatures have a bad habit of signing new bills into law, late in December (I really hate that). But there are always new regs that happened during the year, that you should review.
So, one of your employees just told you that she’s pregnant. Feeling overwhelmed, with no idea where to start? After all, HR just got dumped on your plate. It’s not your zone of genius, and you don’t want it to be.
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A huge one is the minimum wage. Now is the time (well, probably after the time) to review the minimum wage for your location (and yes, that means you have to check at the federal, state and sometimes county and city level as ell). Do a review of what you are paying everyone, and make any adjustment that are required.
Oh, and another fun fact – don’t just look at non-exempt levels. There are minimum levels for exempt employees too – and if you fall below them, the person looses their exemption. In English – that means you’ll have to start paying them overtime. So – it’s best to stay on top of those minimum wage rates.
Other things to be on the lookout for are things like sick leave rules, paid family leave programs (they’re popping up across the nation), has everyone complete their required training for the year (Anti Harassment comes immediately to mind).
If your benefit programs renew at the end or beginning of the year, you should start reviewing your options now. Check in with your team, is there anything particular they want, or don’t want. Start gathering intel, so when you talk to your broker you have a good idea of the direction you want to go.
Of course, there are other things you can evaluate – like the recruiting and onboarding process, job descriptions, doing an I-9 self audit. You’ll definitely think of other things to add to the list. But I think this will give you a good start.
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