Year-end can be a stressful time for your small businesses. From staffing for the holiday season and processing year-end bonuses, to closing out the 2020 books and reporting annual returns, we know it’s the busiest time of year.
But don’t worry! We’re here with the ultimate checklist to make it easy to stay organized and check all the boxes. Let’s get those to-do’s done so you can get back to work — and even spend some quality time with your family!
Year-End Payroll and HR Checklist
Before December 31st, 2020
Verify Employee and Contractor data
- Confirm that employee names are spelled correctly.
- Update home addresses/mailing addresses for active and terminated employees.
- Verify that employee Social Security numbers are correct.
- Confirm that contractor/business names are spelled correctly.
- Update mailing addresses for active and terminated contractors.
- Verify that employee Social Security/Employer Identification numbers are correct.
Verify Payroll and Year-to-Date data
Ensure all payroll entries are completed by December 31st
All contractor payments, W-2 earnings, and bonuses must be completed in OnPay prior to December 31, 2020 to ensure that tax payments can be made on time. Any entries not made by December 31, 2020 could result in IRS and/or State Penalties and Interest which would be the sole responsibility of the employer.
Review W-2 Preview File
Preview your W-2's to review year-to-date payroll data for accuracy. This report can be found in the Reports > Tax Filing Reports > Annual Filings section. Click here for directions.
S-Corp Shareholder (2% or More) Benefits
If your business is organized as an S-Corp, add any shareholder health or auto benefits for 2020 by following these steps: Adding 2% Shareholder Benefits to W-2s.
Record Employer Health Care Contributions
Has your business paid all or a portion of any employee health insurance premiums throughout the year? That data needs to be reported on each employee's W-2, along with any premiums that the employee has paid toward a company-provided plan. You can find out how to Record Health Care Contributions in OnPay here.
Third Party Sick Pay
Third Party Sick pay includes any insurance payments received by an employee through an insurance company and is considered earned income for the employee. The insurance company will provide a notice that details what should be added to the employee's income. To have these amounts added to the employee's W-2, please send the notice to OnPay. These items must be received no later than December 31st to ensure timely completion of the W-2. You can review any Third Party Sick Pay entries on the W-2 Preview.
Services like personal use of company cars, gift cards, and gym memberships are taxable. Ensure that entries which document any fringe benefits received are made to an employee's payroll history. For more information on Taxable Fringe Benefits, please refer to IRS Publication 15-B.
Get Compliant for 2021!
Review Federal and State Law Changes that may impact your business
A number of states across the US have payroll-related changes that will take effect in 2021. These changes include Minimum Wage changes, updated state unemployment wage bases, and new Paid Sick or Family Leave Laws. Click here to find out which changes could affect your business.
If your state unemployment rate is changing for 2021, please make sure to update your OnPay account with the new rate.
Order New Compliance Posters
With all the changes state have made, it's a good idea to order new posters for your office. You can view the changes and order posters by clicking here.
Run year-end bonus payroll
Ensure all bonus payroll entries are submitted by December 22, 2020
If you need to submit bonus pay runs before year-end, allow enough time for them to process in 2020. Depending on the amount, bonus pay runs often require extra time due to IRS Next-Day Rules and pre-approved direct deposit limits. Find more info on how to run Year-End Bonus Payrolls here.
Before January 8th, 2021
Choose your W-2/ 1099 Processing Option
OnPay gives you several options when it comes to providing required W-2s or 1099s to your employees. We generate the forms for free; from there you can print them yourself or ask us to print and mail them for a small fee. Review your account to make sure you selected the right option for your company.
Confirm your company information
This information can be verified under the "Settings" Menu (Gear Icon).
- First, go to Settings > Account Settings > Company Info. Confirm the spelling of the company name is accurate and update company address, if necessary.
- Next, go to Settings > Payroll Taxes. Verify that the Federal Employer Identification Number (FEIN) is correct.
Before January 31st, 2021
If you opted to print your own W-2’s and 1099’s, please note that you are required to postmark or provide copies to employees no later than 1/31/21.