We are rapidly approaching that time of year often considered the busiest for payroll and HR. From the first part of December through the end of January, payroll and HR departments have a ton of work to tackle. Year-end compliance is at the center of it all.
As a payroll provider with years of experience assisting companies of all sizes, we are quite familiar with year-end compliance issues. We have seen our share of companies causing headaches for themselves after not taking year-end compliance seriously. We work very hard to make sure end-of-year issues are not a problem for our clients. We would be delighted to help your company by getting you on board with one of our many payroll solutions.
Employee Contact Information
One of the most problematic areas in payroll and HR is maintaining accurate employee contact information. Why? Because people move. Their addresses and phone numbers change. Yet something as small as the wrong street address could lead to compliance issues when it comes time to file W-2s.
The law requires all information on W-2 forms be accurate. Filing an incomplete or incorrect W-2 could lead to penalties ranging from $50 to $270 per form depending on when you file. Incomplete and incorrect W-2 forms also hold up tax refunds, so getting it wrong is unfair to employees as well.
Note that W-2 and 1095-C information must match Social Security information. For example, whatever name is on an employee's W-2 should be identical to the name on that worker's Social Security card. If they do not match, there is a compliance issue.
Despite the elimination of the Affordable Care Act's (ACA) individual mandate, employers have not been let off the hook. Your company is still required to report how you complied with the ACA during the previous tax year if it employs at least 50 full-time and/or full-time equivalent employees.
In addition to reporting insurance plan information, you also have to report employee information (like SSN and employee address), employer information (like EIN and address), the months in which insurance was offered, and more. Penalties for lack of compliance can be as high as $700 per incident.
Federal and State Withholding
As a result of the 2017 federal tax reform bill, new withholding was implemented for the 2018 tax year. For some people that meant finding out this past spring that their withholding was not enough to cover their tax bills. The problem was ostensibly solved with a new W-4 issued by the IRS.
We say all this to say that the new W-4 definitely impacts federal withholding. It might also impact state withholding in some cases. It is important that your company understand how the new W-4 impacts your state withholding obligations.
Finally, end-of-year compliance includes preparing to issue tax documents on time. This means issuing W-2s and 1099s before January 31. Note that the IRS has also adopted January 31 as the deadline for submitting the forms to them.
Along those same lines, do not forget the issue of employee classification. All your standard employees will receive W-2s come January. Contractors will receive 1099s. It is your obligation under the law to make sure each of your employees is properly classified.
Year-end is a busy time for payroll and HR. If you are not yet a BenefitMall customer, there is little we can do for you in closing out 2019. However, 2020 is another matter. Choose one of our payroll solutions for the coming year and we