During this festive season, it’s vital for businesses and employees to stay merry and mindful of approaching payroll deadlines. Good payroll management brings holiday cheer and ensures compliance with regulations. This blog post unwraps the gift of knowledge, breaking down the essential payroll deadlines to guide you through a holly, jolly year-end process. Let’s trim the tree of success for a prosperous start to the New Year!
Your compliance stocking is stuffed with payroll forms due in January – 941s, 940s, and W2s – to name a few. Taking the time to review payroll journals, address discrepancies, and update employee records before year-end ensures accuracy and sets the stage for a peaceful transition into the new year.
Is the payroll data complete?
Make sure all manual payrolls and non-monetary employee compensation (ex, gift cards and fringe benefits) are reported in the payroll system. Make sure benefits are accurately reported by comparing annual payroll journals to the company’s general ledger. For proper cutoff, all year-end payrolls should be processed and paid by Friday, December 29, 2023. Plan ahead and take into consideration the processing time required by your payroll company.
Encourage employees to review upcoming paystubs
Asking employees to review their next pay stub can identify discrepancies and give them the opportunity to discuss any concerns. This collaborative effort encourages personal financial literacy and allows for timely resolution of any payroll issues before year-end.
Confirm all employees are added to your payroll software
This is especially important if you’ve changed payroll processors during the current calendar year. Make sure all earnings and tax withholdings are reported in the new system to ensure the accuracy of year-end tax filings.
The holidays often include monetary gifts or a year-end bonus for employees. Balancing gift-giving and financial responsibility ensures a harmonious conclusion to the year.
To be included in personal compensation (on a W2), year-end bonuses must be paid before the close of the calendar year. For companies keeping books on an accrual basis, liabilities for year-end bonuses must be paid by March 15th of the following year to be included in deductible expenses for the previous year.
Cash Gifts and Gift Cards
According to the IRS, “cash or cash equivalent items provided by the employer are never excludable from income.” These types of gifts should be reported in your payroll system as a “manual” payroll before year-end.
Yule Be Filing Tax Forms
January brings payroll tax filing deadlines. Preparation in December will make the early days of the new year less stressful and ensure accurate filings.
The IRS Form W2 is a document provided by employers to their employees, detailing the annual wages earned, federal and state income tax withheld, and other relevant information for filing individual income tax returns. The W3 is a summary document of all W2s filed by the employer.
Form 941 is a quarterly tax form used by employers to report income taxes, Social Security tax, and Medicare tax withheld from employees’ paychecks and to pay the employer’s portion of Social Security and Medicare taxes. Many states have their own version of the 941 that is due in January, as well.
IRS Form 940, also known as the Employer’s Annual Federal Unemployment (FUTA) Tax Return, is used by employers in the United States to report and pay their annual federal unemployment tax.
Paper or electronic?
The IRS requires that employers distribute paper copies of W2s unless employees give consent for electronic distribution. Many payroll software platforms offer the option to select how employees would like to receive their documents, as well as have a deadline of mid-January, for opting in for electronic delivery.
Verify taxes in your payroll tax filing drafts
Most payroll software systems offer the ability to review drafts of the filings before they are finalized. This preview is intended to be an opportunity for thorough review and correction of errors before the forms are filed with government agencies. Take the time to review them in draft. It’s much easier than correcting filed copies!
Be Prepared to Start Wrapping Up the Year
In the hustle of year-end payroll, having a skilled accountant and payroll team is similar to having holiday elves for your business. These experts streamline payroll processing and put safeguards in place for payroll tax compliance. Think of it as a touch of holiday magic for your business operations.
At Walker Glantz, our team of experienced bookkeepers, accountants, and payroll experts can be your holiday helpers. Let us help ensure the year-end payroll is wrapped up so you can celebrate the season. Contact us today to get started.