End of Year Payroll TipsHR Resource
December 18, 2013 — 2,734 views
The end of the year is not always a cause for celebrating. This is especially true for small businesses. Such organizations must start planning how they are going to plan their year-end taxes. The HR department in such organizations play major roles in handling this issue that comes up every year. A few simple steps should ease the process out for you.
Consider hiring someone who is very knowledgeable in tax savings. They may charge a hefty fee, but can save you a large amount in the form of taxes. Additionally, once you pick up the tricks of the trade, you will not require their services in preceding years. Get your company to qualify under Expanded Tax Credit. Right now, the credit limit is $9,600 per employee, and $6,240 for those who work for organizations that are tax-exempt.
Avoid Taxes by Offering Fringe Benefits to your Employees Rather than Cash Bonuses
By giving out fringe bonus packages, you are effectively reducing large external costs that your workers would otherwise have to shell out. Tax benefits and fringe bonuses are valuable to employees because it helps them save their salary and use it for things unrelated to health care and child care.
When you do give out bonuses though, make sure that you check how much the net amount comes up to in each individual bank account. If you give a $1,000 bonus, for instance, your employee may only get about $920 after discounting with-holdings. Without processing a bonus through payroll, the IRS can reclassify the amounts as salaries and even penalize you for making an error on payments.
Include Health Insurance Costs on your W2 Form
Remember to include the health insurance that you give out to employees on your W2 Form that you fill out at the end of the year. Payroll providers are not responsible for asking you whether these come under your costs. You will have to pay additional taxes if you fail to mention these costs to the company in the form.
Also remember the statement that shows any rate changes on the state unemployment fund. Provide the payroll provider with this information as well. Without statements that clearly show rate changes, you could face penalties for giving wrong amounts. If you have any other such documents that show that you have additional costs to the government or in the form of employee benefits, be sure to bring them up.