When it comes to year-end payroll, it's better to be early than late. And your payroll processor wants you to do this early as well.
And if you don't currently have payroll in your business but you're a growing entrepreneurial organization, then you will be doing this eventually.
Why You Need to Prepare For Year-end Payroll Early
The payroll companies start processing your year-end packages, W-2s, and 1099 when the last payroll of the year is run. If you wait too long and have to amend anything, that's going to cost you more money because that's on you, not on them.
Therefore, don't skip this process because it can save you a lot of time, money, and energy in the new year. And especially because the IRS has what it takes to take what you have.
Check, Double-check, and Triple-check All Information
Check with your employees to make sure their information like their address and SSN are correct. Be sure to do this before that last payroll of the year gets run because they're going to start running off with your year-end as soon as that's done.
Make sure there are no duplicates as well, where two employees may have the same social security number. To amend all of that and get it in the right person could cost hundreds of dollars. And if you or the company could have just checked the name and security number, that would have cured it all.
Voided Checks and Escort Health Insurance
If there are checks that are not correct for whatever reason and you need to void them, you have to do this early too because it's reflected in the W-2 until it gets officially voided. And if you voided late, you're going to have to issue a W-2 C to report a correction.
Make sure adjustments for your escort health insurance are on the W-2, everything's grossed-up properly, and everything’s correct on the income statement as well, especially if there's any additional payroll that needs to run or catch-up payroll for tax purposes.
If you want to learn more about how you can build an online financial powerhouse, check out 033: Preparing for Year-End 2020 Payroll Early
