The end of the year is an extremely busy time for most business owners and your attention is pulled from managing one task to the next. One of the most important responsibilities business owners face – and one of the most stressful to manage – is payroll tax management.
Let’s take a minute to review two major tax obligations that are of critical importance as the calendar year comes to a close.
Prior to the last payroll of the calendar year
Verify employee data: Accuracy is critical when preparing your payroll taxes. Confirm all active and terminated employee data is correct, especially his or her social security number. Check to ensure all wage figures, benefits, sick time and vacation time has been accurately reported.
Check the wage, tax and benefits information: Ensure special tax information has been collected and correct withholdings have been made for taxable fringe benefits like third-party sick pay, tips, bonuses and any non-cash payments.
Check for special considerations: Schedule any payments for bonuses, track and confirm that all checks are accounted for in the system. Have your employees complete a new Form W-4 if their situation has changed. Now is also a good time to restock your payroll supplies like blank checks, payroll forms and blank W-2.
Prior to the first payroll of the next calendar year
Verify employee data: Correct any discrepancies including a missing or incorrect mailing address or social security number. Ensure any employees who are no longer with the company have been removed from the database.
Check the wage, tax and benefits information: Verify the new state tax rates for disability insurance, unemployment insurance and the taxable wage limit. Compare your payroll register totals to form W-3 totals and verify if the Earned Income Credit (EIC) coding has been submitted correctly.
Check for special considerations: Ensure the new year's month-end close-out dates are accurate and that all necessary management reports are scheduled. Confirm the schedule of pay dates, period end dates and quarterly closing dates. While you check these schedule of dates, make sure they do not fall on any holidays or during weekends and make any adjustments as needed.
Tax management can be time consuming and complicated. But utilizing automated payroll management services can eliminate some of your burden and can help reduce the time you spend generating the reports you need for tax filing.
If you find yourself facing end-of-year payroll challenges, understand that you don’t have to face it alone. Turning to a PEO like GMS – which offers online, 24/7 automated payroll management support, can reduce your payroll burden and save you time and money you would have otherwise spent trying to remain compliant with various (potentially confusing) tax laws.