From PCMAG · Kathy Yakal · · 1m 50s
9 Year-End Payroll Mistakes to Avoid
Software helps prevent payroll errors before tax season.
In brief
Software helps prevent payroll errors before tax season. Businesses can avoid IRS penalties and unhappy employees by fixing payroll mistakes before year-end using software. Originally reported by PCMAG.
1. Waiting Until Final Pay Run to Gather Records
You shouldn't wait until December's last payroll to start year-end tasks.
2. Failing to Verify Employee Data Before Filing
Accurate employee records prevent tax penalties and unhappy workers.
3. Misclassifying Employees as Independent Contractors
IRS scrutinizes companies to ensure contractors aren't really employees.
4. Overlooking Duplicate Payments and Calculation Errors
Check for duplicates, missing benefits, and tax errors before filing.
5. Postponing Account Reconciliation Until Year-End
Quarterly account reconciliation prevents payroll errors during year-end.
6. Forgetting Taxable Fringe Benefits and Extra Compensation
Bonuses, car use, and education assistance may be taxable.
7. Burying Manual Adjustments Without an Audit Trail
Document corrections to avoid confusion when closing out year-end payroll.
8. Neglecting Unused PTO and Accrual Payouts
Unused PTO hours may need to be paid out if your state allows it.
9. Generating Form W-2s and 1099s Prematurely
Wait until January 31 to create W-2 and 1099 forms for tax season.
Why Modern Payroll Software Helps
Software centralizes payroll data and provides reports to prevent errors.
Final Year-End Task
Generate W-2 and 1099 forms after triple-checking payroll data.
IRS Compliance
Avoid IRS penalties by ensuring accurate W-2 and 1099 forms.
Software Benefits
Payroll software helps with year-end tasks and reduces errors.
Key Year-End Steps
Check records, verify data, and generate forms by January 31.
Tax Season Readiness
Proper payroll setup ensures smooth tax filing and avoids penalties.
The key point
Businesses can avoid IRS penalties and unhappy employees by fixing payroll mistakes before year-end using software.
