10 (or 11) Things You Need to Do Now for Successful Year-End HR and Payroll Planning
It’s that time of year again. A time for hot cocoa, family gatherings, warm fireplaces, tacky sweaters, and of course, shopping! It’s also time for those of us in the HR and payroll fields to double-shot our espressos and buy a much larger coffee mug, because while everyone else is celebrating the holidays, we’re preparing for…year-end!
So, what are some of the key priorities you should be planning for as you stare the last six weeks of 2014 down? Here are some top suggestions:
1. Let’s start with the basics. You can’t communicate with your employees effectively if you don’t have their addresses correct. Seriously, when is the last time you updated your employee address records? Maybe it’s time to send a reminder out and ask people to update their records or confirm that you have the correct information.
2. Now that you have the addresses right, it’s time to use them. After all, there are new tax tables; new 2015 W-4 forms applicable if an employee has a major life change such as a marriage, birth of a child, new home purchase, etc.; and so forth.
3. Make sure everyone is clear on how W-2s work, and especially that Box 1 is for Taxable Wages, not Gross Wages. Of course, that means you should explain that Taxable Wages = Gross Wages minus 401K, health, etc. Also, tell your employees that W-2s will be postmarked no later than January 31st but that the exact date is not known (your payroll people will thank you later for pre-empting the normal round of a thousand “When will we get our W-2s?” questions).
4. Since we’re on the topic of W-2s, don’t forget to make sure that Box 3 is not greater than $117,000 and if Box 5 is $200,000 or more, that the Medicare tax taken is 2.35% for any amount $200,000 or more (and 1.45% for any amount less than the $200,000). Also, verify your Box 1 (Taxable Wages) and verify state and local wages.
5. Remember that we’re in Pennsylvania, the state with 2,562 municipalities and 3,195 different entities with the power to levy taxes on your employees. With that many options to choose from, it’s all the more important for you to verify that your local information is properly designated with the correct 2 digit PSD code for each applicable tax collection district. Now is the time to double-check this, while you still have time to make corrections – and while you still have payrolls left in 2014.
6. Get those fringe benefit reports ready and execute them over a range of final payrolls of 2014. This has the advantage of stretching the tax hit over several pays rather than just one or two. This is for things like your Group Term Life policy (the premium on insurance over $50,000), auto fringe, shareholders insurance, etc.
7. Then there are vacations and PTO days. What is your carry-over policy, and do you have accurate records from your department heads and front-line supervisors so that you can count carry-over days for 2015 correctly?
8. Have employees used the funds in their Flexible Spending Accounts (FSAs)? Remember, under changes approved as part of the Affordable Care Act, employees may carry over up to $500 into 2015 if you have modified your plan documents, but that still means that if they have $1,000 in the account, they lose $500. Instead of inciting a riot, send a reminder!
9. If your company will be providing holiday bonuses, now is the time to get those numbers ready for payroll. Do not show up a day before the final payroll run of the year with a laundry list of surprises.
10. So you’re going to hold a holiday party. Great! What are the expectations and limits? Make sure to communicate clearly and don’t set an accidental precedent. For example, if you want the event to be alcohol-free, make that clear. If not, remind employees that responsible conduct is expected at all times. The point is, a firm reminder now is much better than a major regret later.
11. And last but not least, don’t forget to update your new tax tables for Social Security rates, unemployment rates and thresholds, and more – all prior to processing the first pay date of 2015. Happy New Year! Is a list of ten things just not enough for you?
Are you wondering what the other 89 items should be on your 100-point year-end planning calendar? Do you love details more than decorations, and is your idea of a great holiday knowing that your employee records are accurate and your documentation is near-perfect?
Then please join Karen Young, SPHR of HR Resolutions and Tricia Richardson, CPP, SPHR of Stambaugh Ness for a series of FREE seminars being held throughout Central Pennsylvania in November and December 2014. Learn more and register here today:
2014 Year-End Payroll Seminar Series – York | Camp Hill | Lancaster | Hanover
Photo Credit: evilerin @ Flickr (Creative Commons)