You can enjoy the company’s holiday bash even more after you get through these year-end duties.
√ Distribute 2012 W-4s. Employees whose family status has changed, and those who claimed an exemption from income tax withholding in 2011, must file new forms. Everyone else may refile.
√ Notify managers of the cutoff dates for the last 2011 payroll and the first 2012 payroll.
√ Use the 2012 withholding rates for checks that are mailed to employees but that they won’t receive until the next year.
√ Notify employees by the end of January if you haven’t withheld on their personal use of company cars, or are using the special accounting rule to value noncash fringes.
√ Reset employees’ calendar-year benefits balances with the first 2012 payroll. Include: 401(k) pretax contributions and allocations for paid time off, cafeteria plans and flexible spending accounts.
√ Process special December payroll entries. Impute the tax for group-term life insurance over $50,000, personal use of company cars, interest on compensation-related loans of at least $10,000 with below-market interest rates, split-dollar life insurance and 2% owners’ medical insurance.
√ Conduct a final review of the general ledger for “hidden” wages, notably noncash fringes.
√ Reconcile fourth-quarter taxes before the final tax payment is due to ensure timely corrections.
√ Run payroll adjustments for year-to-date corrections and void/manual checks.
√ Inform your service bureau of your W-2 schedule and changes for 2012, including employees’ benefits deductions and new W-4s.
√ Archive 2011 data before processing the first 2012 payroll. Ensure the Social Security wage base, state unemployment and disability wage bases (if applicable), federal/state withholding allowances and tax rates and employees’ benefits data are input into the system.