The end of summer and the start of new routines means getting back into the swing of things. It means the start of football, the beginning of a new school year, and weather that will gradually be getting colder and nights that will be getting shorter. Guess what it means for payroll departments? The approach of year-end.
The tasks that come with year-end accounting add to the workload of HR and payroll departments regardless of company size. As payroll professionals, we can tell you that the key to staying ahead of year-end is to start preparing now. Just like you are already thinking about closing up the house in preparation for winter weather, your company should start thinking about year-end procedures now.
Getting ready for the end of the year involves multiple tasks in the two basic categories: checking and confirming data and preparing for next year through education and training. Let us look at both in a little bit more detail.
Checking and Verifying Data
Being ready for year-end relies on having accurate data to work with. So between now and December, the payroll department should be checking employer indicative data for accuracy. For example, the data an employer has been using to process quarterly tax reports should be verified to make sure it is still accurate.
Other indicative data that needs to be checked and verified include:
- retirement plan data
- employee names and social security numbers
- data on deceased and retired employees.
Wage and tax benefits data should be checked and verified as well. This data pertains to things like deferred compensation, other compensation, uncollected Social Security and Medicare taxes, expense reimbursement, taxable fringe benefits, etc.
Good accounting practices throughout the year guarantee that none of the data you will need at year-end is missing. The point of checking and confirming is just to make sure the data is accurate. The earlier you check and verify, the more time you will have to correct inaccuracies.
Preparing for Next Year
After the final payroll run of the year and before the first run of the next year, certain kinds of data should again be checked and verified. But above and beyond that, part of preparing for year-end is to start looking at training opportunities that will get the HR department ready for 2018.
For example, is your payroll department ready for a tax reform package that could come out of Washington by the end of this year? Does your payroll department know the basics of how a repeal and replacement of the ACA would affect payroll processing?
Small businesses should be looking at taking advantage of as many training options as possible. Training on the following topics is especially important at year-end:
- ACA compliance
- Fringe benefits taxation in relation to W-2 reporting
- IRS efforts to combat tax fraud through payroll year-end reporting
- Security procedures to avoid tax fraud via W-2 phishing
- Adjusting overtime pay procedures in light of proposed rule changes.
It is not possible to know everything that could be coming down the pike in the coming year, but what we already know suggests that payroll will be subject to some significant changes in 2018. It is best for employers to start getting prepared now by making sure their payroll departments are properly trained.
BenefitMall is here to assist with a full range of payroll solutions for businesses of all sizes. If you are currently doing payroll in house, we invite you to learn more about how outsourcing payroll and benefits administration can save your company time, labor, and resources.