It’s never too early to prepare for your year-end payroll. Get ready for 2024 by taking care of these important payroll tasks.
From calculating employee compensation, updating records, filing taxes, and keeping up with changes in local, state, and federal employment laws, your payroll team has a lot to keep track of during the fourth quarter. While responsibilities vary from business to business, some of the most common activities include:
Review Your Business Information. Verify your business information on file for tax purposes, including the business name, address, and state and federal employer identification number (EIN).
Verify Employee Wage and Classification. Depending on job duties and pay frequency, employees can be classified as either exempt or non-exempt. Understand the difference in order to accurately report income, withhold and pay taxes, and manage overtime. Also, become familiar with local wage requirements to avoid potential legal action and penalties.
Verify Accruals and Paid Time Off. Reconcile employee accrued paid time off and other benefits. Ensure employees have used their entitled time off and any accrued time off aligns with your company’s policy.
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Prepare and File Important Forms. Generally, most businesses are required to file the following forms:
Reconcile Payroll Tax Filings. Avoid potential penalties and legal issues by ensuring payroll taxes, including federal, state, and local taxes, have been calculated and filed throughout the year. Reconcile tax filings to identify discrepancies and resolve them before the end of the year. Remember that business tax responsibilities for year-end payroll vary by state, as well as by industry and the size of your business.
Perform Year-End Bonuses and Incentive Calculations. Ensure that all criteria for annual bonuses are clearly defined according to your bonus structure and that the calculations are transparent.
Audit Payroll Records. Audit activity is expected to increase as part of the Inflation Reduction Act to modernize the IRS. These audits will focus on areas such as executive compensation, fringe benefits, and employment tax compliance. Prepare now by conducting a thorough audit and review to maintain accuracy and compliance for year-end payroll activities. Review payroll records, tax filings, and financial documentation to identify any errors, discrepancies, or irregularities.
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Plan for 2024. While wrapping up payroll tasks, it is also important to plan for the upcoming year. Review and update payroll policies, employee benefits, compensation changes, and tax strategies. Evaluate any changes in regulations that may affect payroll and make necessary adjustments to ensure compliance.
Navigate Your Year-End Payroll with Confidence
PLEASE NOTE: This information is for general reference purposes only. Because laws, regulations, and filing deadlines are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits and payroll advisor regarding your responsibilities. In addition, your company may be exempt from certain requirements and/or be subject to different requirements under the laws of your state.
About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for more than 25 years. Propel partners with small to mid-sized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. Visit our website at www.propelhr.com.