It’s that time of year again, everything pumpkin spice, cooler weather and the holidays approaching fast! This also means that the end of the financial year is not far behind.
We know this time can be stressful, but the Xero Support team are here to help ease the worry and we have a free live webinar that will help you through year end! There are some key things that need to be completed to close out the year and start new in 2018. We’ve prepared an appetizer to get you started with more to come around Turkey Day.
Most employers follow a similar process to bring the year’s payroll to a close, and ensuring all numbers are accurate and everything is ready for the new year. Completing end-of-the-year payroll will vary by state so make sure you know what to do for your specific situation.
There are three critical areas to get you started. Start with the general payroll settings, then taxes and finally the review of W-2’s.
Review wage, tax and withholding information.
- Verify that benefits and deductions have been set up and the withholding is accurate.
- Verify any payments that need to be reversed have been completed.
- Enter any additional wages not yet processed for check date 2017.
- Benefits and deductions need to be processed in a Pay Run with wages.
- Verify these common taxable fringe benefits are set up are correctly:
- Group-term life insurance in excess of $50,0000
- S-Corp Health Insurance for 2% shareholders
- Personal use of company vehicle – PUCC
Taking a few moments to review your taxes will help avoid penalties and start 2018 geared for smooth sailing.
- If you’ve received your 2018 state Unemployment Insurance rate, update the new rate and effective date.
- Update the deposit frequency if you’ve been notified it has changed along with the effective date.
- Next day Federal tax deposits – Federal payroll liability that reach $100,000 in one liability period have to be made the next business day.
- The tax liability account debits on the pay period end date and credits on the check date. While there’s no difference at year end, you may need to create a manual journal entry if you need the tax liability credit to appear in the same year as the pay period end date for financial reporting.
- Xero uses the rule: The paycheck is considered as taxable income in the year the paycheck is ISSUED (dated), even if the work was done and the pay was earned in a different year.
To keep things moving along smoothly, check the following information:
- Have your employees moved, got a new phone number? Run the Employee Contact Details Report.
- Check for incorrect social security numbers. Having invalid information can result in issues with filing the W-2.
- Use the W-2 preview function to verify wages, federal & state taxes, employee address, retirement plan contributions and other W-2 data such as health savings account and dependant care contributions.
- W-2’s will include all wages paid with a check date in 2017. Wages paid in 2018 will be included on the 2018 W-2.
Join us for our free live webinar on December 14, 2017, to learn more about processing year end payroll in Xero.
There’s some helpful tips in the Help Center to help you breeze through year end in Payroll. Remember, it’s best to start reviewing accounts for accuracy and reconciling early. For Payroll, make sure the final pay runs and tax filings are up to date for the end of the year and check out this Help Center page for step by step guide
Finally, there is no better time of year to seek advice from a payroll professional or trusted advisor on your business for 2017. Find a certified Xero advisor to help with your business needs in to start the new year off on the right foot.
Now, sit back, relax and enjoy your meal. We’ll chat with you after Turkey day.