Meg Eynon, Vice President of The Payroll Factory®
Published: 24 Oct 07
With the end of the year quickly approaching there are many items that need to be addressed through your payroll service provider. Since most of these items are only addressed on an annual basis you will need to provide your payroll processor with specific and detailed information.
Some of the items that occur only at the end of the year are:
1. Taxable Fringe Benefits (personal use of company owned or leased vehicles, medical insurance premiums paid for S corporation’s shareholder employees, group term life insurance premiums over $50, 000.00, company apartment leases, etc.)
2. Holiday Bonuses (Don’t forget to instruct your provider if you would like to stop direct deposit, change Federal Withholding amounts, or if they should stop 401(k) and medical deductions from these checks.)
3. Third Party Sick Pay (Please report to your provider both short term and long term disability paid to employees through out the year. It has become common with third party sick pay providers to send this information to their clients in mid-January. We recommend that you contact your provider and ask for the information before the last payroll of the year is run for your company. This way all payments are made timely to the IRS and this information can be properly reported on your employees’ W2.)
4. Vacation and Sick Accrual turn over (Please instruct your provider how you are handling vacation and sick accruals. Should these be paid out at the end of the year, or should balances be carried forward into the next calendar year? If there is a payout, please instruct your provider what hours should be paid.)
5. Contact your provider immediately if you know that your company will require an off schedule payroll run for the end of the year. Most providers close the year for your company when the last scheduled payroll of the year is processed. For example: if your company runs payroll on the first and fifteenth of each month, your company year for payroll will be closed when the payroll is processed for the fifteenth of December. At that time most provider software closes the year and year end processing begins. If you know that you will require an additional payroll process you must alert the provider prior to the last scheduled payroll run so that they do not close out and reconcile your payroll for the year until that additional process is completed.
Please check with your accountant to have them help you calculate your company’s taxable fringe benefits.
If you have any questions about our policies and procedures for processing year end payroll, please do not hesitate to contact me.
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