As we end the year and people across the country get ready for the holidays, payroll and HR professionals are preparing for a stressful time. Year-end refers to the completion of the fiscal year. It’s a time for “closing the books,” reviewing transactions, verifying payroll data, and so much more. At Proliant, we’re all too familiar with the chaos that ensues as the leaves drop and the temperature cools. So we put this guide together to help businesses with what needs to get done at year-end.
We also created a handy checklist for you to download so that you can check the boxes on your year-end processes.
Year-end means it's time for calculating taxes, deductions, and compensation and ensuring payroll and taxes comply with federal, state, and local regulations. Here are a few things payroll must prepare for year-end processes.
Verify employee information from Form W-2 (SSN, correct name, address). Check that all information is correct on file, including SSN and FEIN. The IRS may penalize you for any incorrect or missing SSNs or names.
Confirm both the pay period and pay dates for 2022. This is especially important this year because companies on a bi-weekly pay period will have 27 total pay periods this year instead of 26. This will affect annual leave balances that are accrued for the year and other year-end calculations.
Pay period refers to how often employees get a paycheck. The number of pay periods is determined by your organization’s pay schedule (bi-weekly, weekly, monthly, semi-monthly). The pay date is the date on which employees are paid.
Note: Some state laws dictate the minimum frequency an organization must pay their employees.
This is where you will update payroll information before the first payroll run of 2023. Payroll teams will be working hard on the following:
Year-end is a time to review healthcare deadlines and filing requirements. If you are an applicable large employer (50+ full-time equivalent employees), you will need to prepare for the ACA reporting requirements. Depending on the type of insurance coverage and number of full-time employees you had in 2022, you will need to report on certain forms:
If your organization has less than 50 employees (fully insured), then the insurer is responsible for filing. Reporting is not required if your company has less than 50 employees and does not provide insurance.
Important Dates: File forms by February 28 if filing on paper. The due date is March 31 if filing electronically.
If you are an applicable large employer, you must ensure you have all the essential data necessary for reporting. This information includes:
HR teams will need to review and update company policies and benefits at year-end. This includes modifying summary plan descriptions if there are changes and distributing them to employees. Distribute updates annually if they include:
Note: Consider a wrap document when a certificate of insurance or plan document doesn’t contain all of the required eligibility rules and federal notice language.
HR should also encourage employees to verify their personal information on file (name, birth date, SSN, address). Also, ensure that employees have internal resources for accessing the employee handbook and company policies.
Finally, payroll and HR teams should check that all compliance requirements and tax credit reporting are complete.
One of the main causes of year-end headaches is keeping up with regulations and making sure
Double-check employee classifications. The IRS has a great resource for employee classifications: Click here.
Check that all labor law posters are up to date and displayed correctly. The U.S. Department of Labor provides the elaws Poster Advisor tool to help determine which posters are required.
Again, because this is so vital to every step of the year-end process, double-check that all information is correct on file, including SSN and FEIN. The IRS may penalize you for any incorrect or missing SSNs or names.
Form W-2 Copies B, C, and 2 should be sent to employees by January 31, 2023.
Form W-3 is for employers to report combined employee income to the IRS and SSA. This form summarizes total salary payment and withholding amounts and is required for employers who send out more than one Form W-2 to employees.
Form 1099-MISC should be filed for each person you paid miscellaneous income in 2022. Check out the IRS website for specific examples of miscellaneous income.
The Family and Medical Leave Act (FMLA) applies to all public agencies and companies with 50 or more employees. The FMLA provides employees (working under specific conditions) up to 12 weeks of unpaid, job-protected leave per year. During this leave time, it is required that the employee’s benefits are maintained. Visit the U.S. Department of Labor website for more FMLA Guidelines.
OSHA Form 300-A is for reporting a summary of work-related injuries and illnesses. The form must be completed, certified by a company executive, and posted in the workplace. Check out this OSHA document about form 300-A for more information.
Employee Retention Tax Credit (ERTC): Employers have until 2024 to file an amended tax return for payrolls during the pandemic and claim the Employee Retention Tax Credit.
Work Opportunity Tax Credit (WOTC): The WOTC is available to employers that hire individuals from certain targeted groups. The purpose of this tax credit is to incentivize workplace diversity.
Proliant connects payroll and HR data in one place, creating a comprehensive solution that reduces the costs and headaches of managing multiple platforms. Our software streamlines payroll and HR processes and comes with the best service in the industry. Every Proliant client has a dedicated account manager for help throughout the year – even the dreaded year-end processes. Additionally, our payroll and tax experts ensure you are compliant and that you get every tax credit applicable to your business.
Please enjoy this payroll checklist. We hope it makes your year-end go a bit smoother.
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