PAYROLL

GUIDE

10 Steps to
Year-End
Payroll
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10 Steps to Year-End Payroll

Time is running out to close out your payroll for the year—but if you start now, you’ll be able to achieve year-end success.
Get on track, avoid extra work, and have peace of mind with this 10-step guide:

STEP 1

Understand the Fair Labor The Department of Labor is making important updates to the FLSA. If federal
Standards Act (FLSA) approval is granted, the minimum yearly salary requirement for overtime-exempt
employees will increase from $23,660 to $47,476.
changes, and prepare.
During the currently uncertain federal review period, consider seeking legal
counsel to discuss possible next steps for your business. If applicable, plan to
either increase your employees’ salaries or to pay overtime. Stay up-to- date on
crucial FLSA developments at ADP’s FLSA page.

The IRS issued 6.8

million penalties
totaling $4.5 billion
related to payroll
employment taxes
in 2013.*

STEP 2

Understand the Affordable This year, the ACA is requiring small employers with self-insured health
Care Act (ACA) changes, plans and employers with 50 or more full-time (or full-time equivalent)
employees to report health coverage information to the IRS and to
and prepare.
employees. Follow our handy ACA Reporting Road Map to learn more
about your updated responsibilities.
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STEP 3

Understand the Federal Certain states are now subject to FUTA credit reduction, meaning that
Unemployment Tax Act businesses in these states will need to pay higher FUTA taxes per employee.
Find out if your business will be subject to higher taxes under the 2016
(FUTA) changes,
provisions here, and budget accordingly.
and prepare.

STEP 4

Review and verify company

information.
Bonus Points Quick List

It’s important to review and confirm basic business

information, such as your tax ID number and
company email address. Although this information
may seem like a no-brainer, mistakes can happen. Communicate.
Certain departments—such as HR, finance, and
For instance, W-2s are mailed to your company’s IT—may affect the creation and distribution
shipping address—if your legal business address W-2 forms. Coordinate your year-end payroll
is different and you forget to update your account, processing with relevant teams accordingly.
you won’t receive your W-2s on time. Double
check these items with laser precision now to
avoid unnecessary hassle later.

Make a timeline.
Create a timeline for the first payroll of the new
year and the last payroll of the previous year.
Plan ahead for interim payroll to prevent
payment delays.

Update your software.

Make sure you’ve installed the most recent
updates to your payroll software—this will make it
easier for you to take recent changes into account
while wrapping up your year-end payroll.
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STEP 5

Review and verify Be sure to double check employee and contractor information, such as SSNs
employee information. and 1099s. It might be easy to lose track of which employees have moved or
gotten married this year.

Do yourself—and your employees—a favor, and devote the necessary time to

confirming these details, and prevent easy-to-avoid mistakes.

STEP 6

Check your Before your last scheduled payroll for the quarter, make sure to update any
employee totals. employee totals—such as PTO and retirement plans—that you want to include
in the quarter balances. Before December 31, in the fourth quarter, you must
update any missing employee totals and run any bonus payrolls. If you miss the
deadline and have to run a special payroll, the government may charge you
penalties and interest.

STEP 7

Review and verify earnings Begin reviewing your employees’ year-to-date earnings and deductions in your
and deductions. reports, and confirm those amounts. Don’t forget to account for both current
and former employees.
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STEP 8

Review and report Federal law requires businesses to report taxable and non-taxable sick
third-party sick pay. payments made to employees from a third party. This includes any taxes
withheld on those payments. If the third party does not report sick pay, your
organization must report this information on your employees’ W-2s no later than
January 1, 2017.

If applicable, it’s important to obtain this information ASAP, and then to process
these entries on or before your last payroll of the year. Otherwise, your Form
941 and W-2s will not be accurate.

STEP 9

Review and report fringe Fringe benefits are forms of compensation provided to employees, including
benefits. company-provided vehicles and gym memberships—and they’re taxable. If
this type of benefit is applicable to your business, it must be included in your
employees’ pay and reported on employees’ W-2s, unless otherwise specified
by the law. Not sure if you provide fringe benefits? Check out this list.

STEP 10

Christmas may affect payroll Christmas Day is Sunday, December 25, 2016, and the federal holiday will be
processing—plan ahead. observed the following day. Does your payroll schedule coincide with Monday,
December 26? If so, be aware that payrolls won’t be delivered that day.

Payrolls processed on Friday, December 23, will be delivered Tuesday,

December 27, and payrolls processed Christmas weekend will be delivered
Wednesday, December 28. Prepare your payroll processing accordingly to
avoid delays.

* Source: Bloomberg
http://www.bloomberg.com/news/articles/2014-04-08/small-business-owners-have-a-4-dot-5-billion-payroll-tax-problem

Want to learn more about ADP’s expertise on year-end payroll?

Talk to one of our well-informed representatives at 1-800-225-5237
or visit www.adp.com/payroll.