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Clean sweep: Summer is the time to tidy up Payroll

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in Office Management,Payroll Management

Summer is the perfect time to perform simple payroll housekeeping tasks. Here are some items you can check off your to-do list.

√ Scan the computer you use to make tax deposits for viruses and sweep them out. Review and winnow the number of employees who have access to this computer.

√ Notify the IRS promptly if you’ve been phished by emailing dataloss@irs.gov. Tips: Include the company’s name, the EIN associated with the data loss, a contact name and phone number, a summary of how the data loss occurred and the number of employees who are impacted.

√ Check that your commercial payroll software is accumulating wages properly, depositing taxes properly and filing returns properly; correct mistakes expeditiously and discuss the matter with the software company rep.

√ Ensure that your PTO policy requires that employees elect to roll over or cash out unused, accrued leave during the year before the current year in order to avoid a constructive receipt issue; change PTO policies if necessary.

√ Request copies of your tax transcript to ensure that your payroll agent is withholding your taxes, remitting them to the IRS and filing all appropriate forms on your behalf. Register to use the IRS’ suite of e-services at tinyurl.com/irstaxpros.

√ Check W-2 coding for employees’ pretax deferrals into retirement accounts.

√ Classify final wages paid to a retiree as paid to an employee who quits; follow state law or company policy on the timing of these payments.

√ Work with Accounts Payable to create a system for processing employee payments that are made outside the payroll system (e.g., taxable business expense reimbursements).

√ Confirm that deduction codes for fringe benefits are correct; test on a manual check and then test through to a W-2.

√ Determine whether missing persons’ locators are effective in contacting former employees who are owed final paychecks or 401(k) distributions; work with Benefits to refine the steps taken to locate missing employees.

A step-by-step payroll compliance guide to each pay period, month and calendar quarter of the year is now available. Download it free here.

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