It may seem far away, but the year will be wrapping up before we know it. Small business owners need to keep in mind all that needs to be submitted to complete required documents.
Here are some important items to keep in mind when finishing up the tax year. Remember, not all may apply to all businesses.
Changes at the company level
Company address. Make sure the company address is correct. All W-2s and annual filings are prepared with the business’ legally registered address. If there are any changes they must be registered with all government agencies.
Often, especially with small businesses, the owner uses their home address when they initially register with the IRS. That address will appear on W-2s and tax returns if it isn’t changed with the agency.
Contact information. Review payroll and ownership contact information to make sure they’re up to date. Also, businesses may authorize a CPA and/or bookkeeping to obtain online reporting on their behalf. Remember to notify these services if there are any changes to these authorizations.
Policy changes. Alterations to company policies that will affect 2016 payrolls should be submitted as soon as possible. Submissions may include but aren’t limited to:
- Pay frequencies,
- Insurance rate changes,
- Time off policies, and
- 401k plan changes.
Changes at the employee level
W-2s Forms. Make sure employee information, including name, Social Security Numbers, and addresses are correct.
Remember, for unemployment purposes workers must have their correct Social Security Number listed on their W-2s.
Deferred comp/retirement plan. Employees who contribute to a deferred compensation plan via a payroll deduction will have the “Retirement Plan” box marked on their W-2s automatically.
But if a business has a qualified pension plan that doesn’t run through payroll, the “Retirement Plan” box should be marked manually for any individual for whom they’ve made contributions.
Manual checks. Any payments issued to employees that were not included with previous payrolls must be submitted.
Miscellaneous. Don’t forget to include changes such as new earnings codes, voided checks and new deductions.
Group term life. If a company provides this type of insurance to employees, all premium amounts exceeding $50,000 are subject to withholding tax.
S Corporation 2% shareholders health insurance. The cost of premiums provided to 2% shareholders must be reported as income on the W-2s. This amount isn’t subject to Social Security or Medicare taxes.
Third party sick pay
Third party sick pay benefits must be included on W-2s. They must also be reported to the IRS and Social Security Administration during the same year that the employee got the payment.
Disability vendors will send year-to-date notices of disbursements to the business as they occur, as well as an annual statements of benefits after the year-end. When reporting these disbursements to an outside bookkeeping service, show the records of these payments as they are made and not just the annual report. This way, reporting requirements to the IRS can be fulfilled.
Fringe benefit adjustments
Personal use of company car. Personal use of a company car provided to employees is taxable.
Dependent care. As long as both spouses work, as much as $5,000 contributed by an employee to a flexible spending account for child and dependent care expenses is excluded from taxable income.
Gifts. Tangible gifts to employees such as real estate rentals or gift cards is taxable and subject to withholding.
Make sure to let the accounting firm that handles the company bookkeeping tasks if there will be any extra bonus payroll before the end of the year. All payroll processing for the year must be completed before December 31.
Filler & Associates can provide more details on reporting deadlines, and help make sure the business is in compliance with all regulations. Schedule an appointment today, before the end of the year sneaks up on us.