When it comes to the end of the year, you have to break out of your regular payroll processing routine and work on end-of-the-year calculations. These yearly tasks are complex, but the process of completing end-of-the-year payroll processing can be easier with a few simple tricks.
1. Require Employees to Update W-2 Forms
With about six weeks left in the year, require all employees to sign-off and verify that the information on their W-2 forms are correct, and fill out a new one if they are not correct.
If you have W-2 forms that contain the wrong employee name or wrong Social Security number, your business will be charged a fine.
Remind employees that their name on their W-2 is the name on their social security card, not the name that they go by. Every little detail matters for the name, from spacing to hyphens.
You may want to ask for a copy of your employee's actual Social Security card to verify all the information on the W-2 is filled out correctly.
2. Confirm Addresses Twice
You are going to want to have everyone confirm their address when you ask them to update their W-2 forms. It is also a good idea to send an email out at the end of the year, or at the start of the next year, to confirm that everyone's address is still the same and that no one moved during the end of the year. You need people's most up-to-date address as you will need to mail out everyone's W-2 to them at the end of January. Right before you mail out the W-2s, send out one more email asking anyone to inform you if they have moved in the last month.
3. Start Processing W-2 Adjustments
Finally, you need to start processing all W-2 adjustments that you need to make beyond the traditional payroll. For example, you need to make sure that you include expenses such as bonuses, incentive pay, employer-paid education, and group-life insurance expenses. Depending on how many of these benefits your company offers, it can take a while to complete all of these adjustments for each employee.
This process is much easier if you record these adjustments in each employee's file throughout the year. If you don't already have a system set up for this, set one up for the upcoming year so that this task is easier to complete next year.
When it comes to end-of-the-year payroll, make employees verify their W-2 information, and follow up at the start of the year to make sure everyone's addresses are accurate. Be sure to set aside enough time to complete W-2 adjustments for each employee. For more information, contact companies like 360 Payroll Solutions.