No matter if you reflect on 2017 with fondness or are happy to have the past 12 months in your rearview, it’s safe to say that finishing the year on a high note is a shared goal amongst teams. From a payroll perspective, a big step in the annual wrap-up process is to make sure that you are set up for accurate year-end reporting, and expectant of changes for the new year. Here are a few things to remember before launching into your 2018 payroll:
Last year we discussed the importance of validating employee and employer information before annual W2’s are generated. This includes employees confirming that the following is information is correct in the payroll system:
And, employers should confirm that their information is correct in the payroll system, including:
The last day of the year, December 31, falls on a Sunday. This means that the last banking day of the year is Friday, December 29, 2017. With company and banking holidays impacting the timing of payrolls, it is important to understand what day payrolls need to be submitted to your payroll vendor in order to have employee pay recorded in 2017.
Most payroll vendors withhold taxes throughout the year, so there are seldom any surprises when it comes to payroll taxes. But if you have employees in California or the Virgin Islands, there will be additional taxes due along with your 2017 Federal Unemployment Taxes. This is because of a Federal Unemployment Credit Reduction for those states that had to borrow from the federal government to help pay for unemployment benefits. Employers will be taxed an additional 2.1% on the first $7,000 of wages (up to $147 per employee) at the end of the year for employees who worked in California or the Virgin Islands. If you have employees in these locations, be prepared to pay these additional taxes.
When you return from holiday break, you want to be sure your business is squared away to run the first payroll of the year. If you have employees with deduction limits*, make sure that you see those deductions for employees on the first pay run of the year. If you have PTO plans that issue hours at the beginning of the year, make sure that the new PTO balances are processed properly and reflect the organization’s PTO policies.
So, before you head out for break, be sure you’re squared away to kick 2018 off on a high note! Bundling your HR and payroll allows you to focus on your people –rather than the payroll process. Request a demo of Zenefits to discover how our integrated software puts your employees in the driver’s seat – chat with a Zenefits payroll consultant today!
*Deduction Limits are amounts a deduction should not exceed in a year, or for the life of the deduction, depending on the deduction. For example, the annual deduction limit for standard 401k is $18,000. Once the limit for the year is hit, the deduction is often stopped for the year. When the new year begins, the deduction can begin again.