Planning Ahead for a Smooth Payroll Year-End Process
Most people dread year end. And yet, the year-end deadline is a critical one. We have one deadline, and sometimes no extension to complete tasks for the year. If year-end deadlines are missed, the work can double or triple. Whether it’s missed payments, incorrect allocations, negative wages, adjustments, that last minute year-end rush that always seem to “creep up on us!”
However, it does not have to be stressful. There are ways in which you can alleviate the headaches from year end by adding these simple things to your routine processes. All this can be prevented with a few simple steps added to our payroll processes and procedures.
- Running the Negative Wage Report after every payroll.
Negative wages create errors that can prevent you from printing W2’s for your company. These are sometimes caused by reversals and/or adjustments. Incorrect tax categories can also cause negative wages.
Most of negative wages or errors can be found by simply running one of the Negative Wage Reports. For best practice I suggest running one at the close of each payroll along with your other final reports. By doing this, you can correct any issues found on the report before the end of the quarter and also prevent future checks from having the same issue(s). If caught in time, the changes can be made during payroll if it’s being processed current quarter or via adjustments.
- Timely Employee Updates.
Ensure that employee changes are done as soon as possible. For example, when an employee moves or changes job locations, whether it is out of state or within the state (especially states with local taxes), please update immediately. Taxes are driven by where you work and where you live. If the employee is taxed incorrectly, adjustments will have to be done for that entire period.
When timely updates aren’t made there can be overpayment, under payment, direct deposit errors (depositing into wrong accounts, delay in pay, incorrect taxes etc.
- Don’t wait until the end of the year to complete adjustments.
For best practice, I recommend making the changes within the affected quarter.
This can prevent reoccurring issues and can also save time in the long run. Whether you are issuing a refund for a benefit that should have been terminated or updating a payment made through Accounts Payable, always try to make your changes timely. Year-end adjustments can lead to W2 corrections, refiling correct taxes, additional fees and fines. This can prevent negative impacts to the employee, employer and 941 filings.
Year-ends don’t have to be stressful, and implementing these and other useful tips can save you time and money. We at NeoSystems can assist you with making your year-end smooth and painless. Contact us for more information.
