2019 Payroll Checklist
One of the best ways to start the New Year off right is to make sure everything’s in order for 2020. And one of the most crucial areas of your business to review is payroll. Not only is payroll likely your largest expense, and time consuming, but it can also have a big impact on morale and your reputation in the market. So getting it right is essential.
As you look over your payroll records from 2019, here are the top areas to address to prepare for the New Year:
- Employee Data: Check over the personal information for each employee. Confirm that their name, address, and Social Security number are correct and that the name on their Social Security card matches. If your business uses freelancers or independent contractors, you’ll want to ensure the Tax Identification Numbers you have on file are correct.
- Wages: Double-check employees’ pay rates, benefits, and deductions. The last paycheck for the year should include any wages and benefits that have been paid to them throughout the year. If something isn’t accounted for, be sure to add it to the final 2019 paycheck.
- Tax Forms: Remind employees at the end of this year to review their current W-4 information and make any withholding changes before 2020 begins to make sure the amounts are accurate next year. And don’t forget to use the new Form W-4 for any new hires in 2020! If any workers left your company before the end of 2019, you can give them a copy of their Form W-2, which is due no later than January 31 to both former and current employees.
- Company Information: If your business underwent a name change or moved, make sure your legal name and address are updated. Partnership and corporation name changes can be indicated by checking the appropriate box on your current year tax return or by writing to the IRS if you’ve already filed. To make any address or location changes, use Form 8822-B. Depending on the reason for the change, like a merger or business structure change, you may need to apply for a new EIN as well.
- Withholding Rates: For higher-income employees, be sure you stopped withholding Social Security tax at the maximum of $132,900. And remember you’re required to withhold an additional Medicare tax of .9 percent for any employee earning over $200,000. Forgot the added amount? The IRS allows employers who failed to withhold the correct amount of additional Medicare tax discovered in the same year it paid the wages by making an interest-free adjustment on the appropriate corrected return. Once a company discovers the error, it should deduct the correct amount of additional tax from any wages or other remuneration it pays the employee on or before the last day of the calendar year.
- Deposit Schedule: While you may have a quarterly, monthly, or semiweekly deposit schedule for payroll taxes this year, that can change in 2020. The schedule is based on your lookback period and can vary from year to year so make sure to confirm your deposit frequency before the start of the New Year.