The end of the calendar year comes with a flurry of unique activities, like making adjustments to payroll after its final run.
“Many of the activities associated with year-end payroll processing occur only once a year, during the same timeframe, which can cause confusion to the already complex process,” said Mark Strippy, senior vice president of operations for BenefitMall, an employee benefits, payroll, HR and employer services company.
Making adjustments to payroll can also come with additional fees and penalties, which can be avoided with a little planning, Strippy said. In order to help companies avoid the fees, he advises checking on these three common adjustments.
• Schedule Bonuses Early. Payroll staff should make sure benefits are scheduled in advance. “Headaches are caused by employee bonuses specifically since they often push employees into higher tax brackets for that pay period,” Strippy said. “Employers need to determine which of the several methods available – percent method, aggregate method – should be used when calculating taxes for bonus payrolls.”
• Check Employees Identification Information
A mistaken Social Security number can result in penalties imposed by the IRS as well as some state governments. “Businesses should remind their employees to check and update their personal data on a regular basis. Minimally, they should request in November and December that every employee confirm the accuracy of their personal and W-4 information,” Strippy said.
• Third-Party Sick Pay. Coordinate with sick-pay providers to determine who is responsible for providing information on the W-2s.
Dallas-based BenefitMall issues a year-end payroll guide outlining best practices for year-end processing. http://pages.benefitmall.com/2013YearEnd.html.