The end of the year can be a stressful time whether you do payroll services for a big company or a small business. This is the time of year when you have to check every balance sheet, tax deduction and allowance, and final numbers with the utmost care. When it comes to making sure your payroll is complete and accurate, there are a few things you can do to be proactive to help make this hectic time go more smoothly.
Check Employee Records
Before you file your annual taxes, make sure you have complete and accurate information for all of your employees. W-2 forms with incorrect addresses, social security numbers, or filing statuses can mean you'll get a fine from the IRS. The IRS usually charges one fine per W-2 that's missing any information or that's inaccurate, so it's a good idea to have all employees verify their information several months before you go to file. This will prevent problems and ensure that everyone gets their paperwork in time for tax season.
Verify Employee Adjustments
Throughout the work year, some employees may have additional income from things like bonuses, company vehicle mileage and use expense reimbursements, or even moving or relocation expense compensation. These additions to income are considered taxable and must be reported on your year-end payroll reports. Make sure you have everyone's complete information in regards to any additional income before the end of the year so you can accurately report it for tax purposes. This information should be tracked throughout the year, but it's always advised that you go over employee records one more time to confirm that everything is accounted for before filing.
Look For Manually Issued Checks
Today, most companies use electronic records and direct deposit for most employee paychecks. In some cases, people may have been issued manual printed checks, which can easily get lost in the shuffle when it comes to your payroll bottom line. Go through your paperwork and check with your bank for any voided checks that were issued throughout the year on paper. This will give you a snapshot of the paychecks that may have not been entered into the database. Go through each manually issued check and make sure it's been accounted for so you'll have the correct amount of income and taxes tallied up for each employee. The end of the year is certainly hectic, but with a little proper planning, your payroll reports should be completed and submitted with ease.