July 17, 2019Managed Payroll Support, Optimization Support, Payroll & Tax Support
Have You Started Thinking About Year End? Let Us Show You How to Have a Smooth One
The sun is shining, the trees are green and the temperatures are high—so, it may seem like a strange time to be thinking about the cold and short days of year’s end. However, hear us out. Year end is coming, whether you are thinking about it or not. Year end is a time for thick knit sweaters, chicken noodle soup, holiday parties, and for quite a few companies, reconciliation of the fiscal year. While other aspects of year end may bring excitement, year end often brings a sense of dread for those who have to reconcile their company’s taxes and financial statements.
Some of you might be reading this and thinking, “Reconciliation? Who has time for reconciliation? I’ve never done a reconciliation in my life, and my company is doing just fine.” Perhaps you’re right. But, for how long? All it takes is one bad payroll, one incorrect number in the employer identification number (EIN) or one incorrectly written Social Security rate, and come year end, headaches will abound. As Ben Franklin said, “There are only two guarantees in this life—death and taxes.” You may think you’re paying the correct tax rates, but if the IRS doesn’t agree, your working life can be flipped upside down. Why risk it?
A smooth year end is about preparation. The more prep work that is done early on—say, when the days are long and hot—the less stress and frustration you will face when the days are short and cold, chock-full of family parties and holiday shopping. But, what does this prep work look like?
Judi Francis, a 19-year veteran of Wise Consulting, says that year end prep should start at the close of the second quarter. “If you have any issues to resolve, and so many companies do, starting at the end of the second quarter allows you to take care of a half-year’s worth of problems. Once those problems are reconciled, you will have only half as much work to do at the end of the year,” she says. Any issues from the first half of the year will also be fresher in the minds of the payroll processors, which will help to reduce stress at year end.
Judi also urges her clients to look at payroll differently. “You want to think of every payroll as the last payroll of the year. Get into that mindset, and you will pay closer attention to the little, but important, details,” she says.
What are some of these little details Judi refers to? There are a ton: Has your company just undergone a merger and streamlined your staff? Your state unemployment (SUI) rate has probably changed. What about your “highly compensated employees”—are you taking out the additional .9% in Medicare tax they are required to pay? And just what is a “highly compensated employee,” anyway?
There’s a lot to remember, and that is only the tip of the iceberg. Fortunately, you don’t need to worry about keeping all the little details in place. That’s where Wise Consulting comes in.
Wise has helped hundreds of companies perform year end reconciliation. Judi recalls a law firm client she helped recently.
“The firm had hired a new payroll manager at the end of the year, so she was thrown right into the thick of it. We came in and helped her perform reconciliation and provided her with a checklist of best practices for year end, so that next year, she would be able to get a head start and have a far less stressful time. I also showed her how to reconcile taxes after every payroll period, which takes a huge weight off of payroll’s shoulders come year end.”
And, with many software programs, such as Ultimate Software or Ceridian Dayforce, there’s no need to whip out the spreadsheets and calculators to perform a manual reconciliation—let the software do it for you!
There are a lot of tiny mistakes that can be made throughout the year that can add up to one big problem come year end. We’re all human, and it happens. Don’t let these issues turn into a reconciliation nightmare. Enlist the experienced professionals, like Judi, at Wise Consulting to help you get prepped for year end, so that you can focus on more important things. Contact Wise Consulting today to get started.
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