White Paper

Year End Payroll Processing Tips

Updated on

September 25, 2019

Jim Scheithauer

Year-end again! What do I do now?  

General guidelines and tips when considering your year-end process.

It's that time of the year again. I know there are thoughts of Christmas shopping, threats of snow storms, and chestnuts roasting on an open fire. That's all fine and dandy but I am referring to the most anticipated year-end for the payroll professional. You don't have to dread this time of year, you just have to do some early planning and your next few months will not only be successful but less stressful.

The below points and examples are offered as a refresher for the upcoming year-end - or to give you something to ponder as we get closer to that time. The points below may be helpful and accurate but may not include everything that you may need to consider for your company's processes and success.

Preparation for Year-end 2019 and 2020

Plan out the next couple months NOW.

Possibly create a year-end committee, which includes various departments that may have a role, big or small, in year-end process. The communication with other departments allows for the process to run smoothly without and major incidents. Such departments to include may be Human Resources, Accounting, IT, and Mail Room. Things to relay and discuss may include:

  • Reviewing of important dates, including payroll dates, holidays, deadlines, and employee vacations
  • Scheduling of tasks and assignments and who is responsible

Attend a year-end class if you can. This allows you to refresh on processes, procedures, and legislative laws while getting updated on new laws, requirements, and annual changes.

Class examples include:

  • CS3 Technology's Abra/HRMS class or webinar (which not only updates on legislative updates but how to process the Abra/HRMS software for reporting, etc)
  • APA courses, in person or webinars can be helpful.

You can order a CS3 Technology year end manual if you require more information than what is supplied below.

Disaster Recovery: Year-end is a good time to review with your IT department that system backups are being done for your payroll system and data which can be easily retrieved if such a need arises. Also, review how and when you do data backups within your system during payroll and quarter/year-end times. The last thing you need is no recent backups being available when an emergency arises.

Remember: you can never plan too much. Get started early.

Things to do during Year-end 2019

Order W2's early! The later W2s are ordered the later the deliver once the year-end rush hits.

A good rule of thumb is to order 1.5 x the amount of employees you had work during the year.

Get all 2019 taxable fringe benefits in the system and taxed before last payroll.

  • Examples: GTL or Auto.
  • Record any Third Party sick pay.

Apply proper system updates when required (which will apply new 2020 updates as well).

Balancing and Wage and Tax Reconciliations - Reconcile the 4th quarter and the YTD numbers. Below are a couple suggested tips to be added to your normal balancing processes.

Do hand calculated taxable wages in Excel.

year end payroll report types

* Most states are calculated this way.

The four quarterly 941s should balance to your W2 totals. Create a spreadsheet to enter 941 total and that can be used for comparing to your W2 totals.

W-2 Totals by Quarter for 941 totals

Reporting: review any new requirements.

Review setup in payroll system that populates Employer-Provided Health Coverage (Affordable Care Act) amounts correctly to W2 under Box 12 DD. Remember if a company issues fewer than 250 2019 W2's then the company is not required to show on W2.

Below is the chart to determine whether or not to check Box 13 on the W2.

Form W02 Box 13 Retirement Plan Checkbox Decision Chart

Be aware of the W2 filing dates as well as other reporting requirements such as 941, 1099, and SUTA.

Things to do for the New Year 2020

A good payroll motto to live by is: For you to have a good year-end, you must start the year off right.

Get all new or updated benefits setup into the system and test deductions for correct amount to be withheld.

Review all earning codes, deduction codes and tax codes setups, especially any new ones that may have been setup for the New Year.

Review and implement any new wage-bases and limit changes for 2015 such as 401K and taxes. Make sure the goals of earning and deduction codes are updated.

Make sure to account for new changes in Social Security wage-base.

Update Medicare .

Make sure to account for new changes in Retirement and Annual Comp limits.

Make sure to account for new changes in Unemployment wage-bases:

NOTE: Even though the above numbers are correct, the examples listed do not provide a complete list that you may have to account for regarding your company.

Check the first payroll of the year very carefully. One example: Are taxable wages per each tax code. I do suggest however, to balance every payroll thereafter even if it is a quick balancing using some of the balancing tips from above. This will ensure a good quarter balancing and overall a good 2020 year.

Written By
Website Proudly Crafted by DSB Creative