The weather is changing, and the hustle and bustle of the holidays are upon us.  However, in the HR and Payroll world there is still quite a bit of work to be done before enjoying that holiday cheer.  Bonuses, performance reviews, open enrollment and annual increases are all converging at once.  It is time to take a deep dive into your payroll data to ensure it is accurate and up to date for production of tax and benefit forms.  With all of these competing priorities, closing out the 12-month period can be challenges.  By following some of the suggestions below you can be sure you are prepared for a smooth transition into the new year.

List out the deadlines and work to be completed.

Annual deadlines are tight. It’s helpful to establish a calendar capturing important milestones.

• When will performance reviews be completed?

• When will bonuses be paid?

• When does the organization process annual increases?

• When do new benefit plans take effect?

• Many payroll vendors require the final annual payroll to be submitted earlier than normal; be aware of cutoff dates.

It is important to involve multiple people to develop realistic timelines. Including HR and Finance teams is key as many projects they manage can affect payroll systems and processes.  This coordination will ensure each department can be successful, and employees will have the best experience.

Have employees confirm their personal information.

Ask all employees to inspect their personal information within the HRIS for accuracy.  This should include home address, tax deductions and social security number.  This is also a good occasion to remind employees about their options for delivery of W-2’s and 1095 forms.  Most systems allow employees to choose a paper or electronic version.

Run payroll audit reports at the beginning of December.

Do not wait until December 31 to scrutinize company payroll reports.  It is best to allow ample room to find errors and make corrections.  It is much easier to clean-up and resolve issues before moving into the next calendar year. Best practices include running a report with all employee YTD totals, and then review and examine this information for accuracy.  Next, evaluate each deduction category, paying attention to limits set by the company and tax agencies.

• Are employee 401(k)/Roth contributions beyond the maximum allowed?

• Are the 401(k) employer match limits met? If not, schedule and process employer catch-up contributions.

• Were 401(k) loan deductions made according to schedule?

• Have HSA and FSA contributions limits been exceeded?

Additionally, make sure to inspect all employee health and welfare deductions to ensure they were properly setup and subtracted during the year. Check medical, dental, vision, and imputed income (i.e. domestic partner benefits, and employer paid life/AD&D). If the company is required to comply with ACA reporting regulations, confirm employer paid benefits are properly mapped in the HRIS, so accurate 1095 forms are produced.

Another key element is outstanding payroll checks, which directly ties to accurate wage information on a W-2. Ask the finance team for a list of uncashed current (and former) employee checks. This will provide time to contact staff and learn if a reissue or void is necessary. Lastly, most HRIS allow previews of W-2 forms.  Take advantage of this opportunity to examine W-2 wages and taxes before finalizing.

Set the new year up for success.

Now that the annual audit and clean-up is done, it is time to prepare for the new payroll.  There are some simple tasks that can be done to make sure you are ready.

• Create and send out an updated payroll calendar with all deadlines and cutoffs

• Survey medical benefit deductions and ensure premium amounts are accurate

• Establish codes for newly offered benefits (i.e. wellness stipends, cell reimbursements); determine if they are pre or post tax

• Update or reset retirement plan, FSA and HSA limits

• Set-up any new state or local tax codes

If you are unsure about coding benefits, contact the benefit broker or a tax advisor for guidance.  Year-end can be hectic, but with a proactive plan in place, you can greatly reduce your stress and find space to enjoy the holidays.