For pain-free year-end payroll processing, review our handy list of tasks and best practices to get a jumpstart on the new year.
Year-End Payroll Processing Guide
TOP Items to Review by December 31
- W-2 Delivery Preferences: Confirm how you want your W-2s delivered.
- Employee Addresses: Verify employee addresses and send over any updates using W-2 Edit Report.
- Bonuses: Let us know if you plan to issue bonuses and review our bonus run checklist for helpful tips and information.
- 2% S Corporation Shareholder Health Insurance Premiums: Let us know what amount to report if this applies to you.
Need Help? Watch Our Year-End Webinar
ASAP and Bank Holiday Closures
ASAP will close early on Christmas Eve. We also will be closed on Christmas Day and New Year’s Day. Processing dates may be moved up because of bank holidays.
Recommended Year-End Payroll Tasks
If you have the time, we recommend the following tasks to help tidy up your records for year-end reporting (your CPA will thank you!).
In November, you should have received a letter from the state confirming your unemployment insurance rates for 2019. Please shoot us a copy of this notification to your account representative. (Note: In Colorado, 501(c)3 organizations are exempt from state UI if they have fewer than four employees.)
You may may receive an IRS Deposit Frequency or State Filing Change notice. Let us know if you have received this notice. If your frequency has not changed, you will not receive a notice. As a safeguard, ASAP runs a cross-check annually using the look-back data in our files to ensure we are paying taxes according to your IRS and state deposit requirements.
Officers of an S corporation are supposed to receive a reasonable salary payment each year for their work. You may wish to speak with your CPA to insure you’ve paid yourself a reasonable salary to comply with the IRS.
If you drove a company car for personal use, please contact your CPA so they may calculate the taxable benefit you received for using that vehicle for personal use. They likely will ask for total miles driven and personal miles driven. It is ideal to PUCC miles with your last wage payment of the year and/or prior to December 31.
We love to help, but we are not your CPA. Some tax planning questions require your CPA’s guidance. We’d be happy to communicate directly with your CPA. Please complete our Authorized CPA Form and we will grant them access to your payroll files directly.
The new year typically brings employee benefit election and premium changes (e.g., health insurance premiums, 401(k) contributions, etc). Please reach out to your account manager so we can help implement these changes.
Payroll Tasks to Get a Jumpstart on the New Year
To start the new year on the right foot, we recommend tackling the following tasks.
Don’t wait for your CPA’s review in March to find a bonus or benefit not properly recorded through payroll. Dive into your books to look for any oddly coded payments issued to employees that should have been reported on their W2s. You might also review your books for any ski passes or other fringe benefits issued to employees that were not work related. Finally, if you have a group term life insurance policy, check to see if there was a taxable component.
Federal and state law requires employers to post labor law notices in the workplace. Unfortunately these mandatory postings have been changing slightly every year. You can update manually by printing updates based on the US-DOL and state’s guidance or simply order a laminated All-In-One Labor Law Posters at wholesale prices.
Every year, we include a report of your payroll schedule with the last payroll of November and again with the first payroll of the year. Review the pay period start/end dates, process dates, and check dates. Keep an eye out for banking holidays/weekends to see how they impact process and check dates. Does this match your company policy in terms of payments prior to or after holidays/weekends?
If you had independent contractors, you will need to prepare and file Form 1099-MISC for each worker. If you need help, check out our 1099 Processing Services. (Note: To take advantage of early bird processing prices, submit your 1099 Processing Application before January 15.)
Employees who claimed exempt on line 7 of their W-4 should complete a new W-4 before February 15. If they have not, employers are supposed to change the employee’s withholding to Single/0 until updated. We plan to provide employers with a list of employees claiming exempt before mid-January. While other employees are NOT required to complete new W-4s, the IRS encourages employees to check their withholding by using the IRS Withholding Calculator.
As part of year-end balancing, use a YTD payroll register or the Form W-3 to compare the wage totals against the wage line in your books to ensure all payroll runs were posted in your accounting software.
2019 Payroll-Related Updates
- 2019 Colorado Minimum Wage: $11.10/hr (standard) and $8.08/hr (tipped)
- 2019 401(k) and Simple Plan Limits: 401(k) increased to $19,000; Simple IRA increased to $13,000
- 2019 HSA Limits: Self-only increased to $3,500; family increased to $7,000