Year-end duties can keep you from enjoying this holiday season. But it doesn’t have to be that way, if you get through these year-end duties.
√ Distribute 2013 W-4s. Employees whose family status changed and those who claimed an exemption from income tax withholding in 2012 must file new forms; everyone else may refile.
√ Notify managers of the cutoff dates for the last 2012 payroll and the first 2013 payroll.
√ Let employees know whether you will charge a fee for issuing replacement W-2s.
√ Inform your service bureau of your W-2 schedule and changes for 2013, including employees’ benefits deductions and new W-4s.
√ Use the 2013 withholding rates for checks that will be mailed to employees late in the month, and that won’t be received until January.
√ 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 for 2013. 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 and 2% S corp 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.
√ Archive 2012 data before processing the first 2013 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.