With summer heat setting in, you may be tempted to run through the sprinklers. But before you slip off your sandals, consider tackling these generalmaintenance tasks. Getting things in order now also makes for a smoother year-end process.
√ Check your payroll files for employees who terminated before yourimplemented the 4.2% Social Security rate. What you’re looking for: That you reconciled manually cut refund checks, and that employees signed statements regarding their refunds.
√ Ensure that all monthly, quarterly and annual balances are accumulating properly; pay attention to adjustments.
√ Keep track of the vendors that accept credit card payments; 1099-MISC reporting isn’t necessary for these vendors.
√ Test the security of the computer you use to make tax deposits. Scan computers for viruses and sweep them out.
√ Photocopy timely filed state unemployment returns so you have substantiation that will allow you to take the full FUTA credit on this year’s Form 940. Make sure SUTA deposits are made under the proper company name and state ID number.
√ Confirm that employees’ domestic partners qualify as tax dependents for 2011 (i.e., they live together, employees provide more than half their partners’ support and partners’ annual income doesn’t exceed $3,700). Stop withholding taxes from employees for benefits provided to these individuals.
√ Prepare for the IRS’ National Research Programby validating payroll returns, and coordinating the substantiation for independent contractor agreements, , officer compensation agreements and T&E reimbursements.
√ Audit your lock-in letter procedure to ensure that employees receive their copies within 10 days, and that thepostpones any increase in withholding for 45 days or the date indicated in the IRS’ letter.