Upload
zenpayroll
View
222
Download
1
Tags:
Embed Size (px)
DESCRIPTION
The end of year can be a very stressful time for you and your business. That’s why we wanted to help take some of the anxiety out by providing you a helpful guide on how to get your business ready for the end of year. We’ve broken this guide into three pertinent sections for your business: employees, accounting, and taxes. Each section includes detailed to-dos, best practices, and common areas of concern. We also provide a printable checklist in each section so you can quickly stay on top of things. At ZenPayroll, we try to make payroll easy and delightful. We believe many of the anxieties for your company’s end of year preparation stems from legacy processes and confusing information. With this guide, we hope to help small business owners like you navigate the ins and outs of getting your business ready for end of year.
Citation preview
T H E U LT I M AT E G U I D E :GETTING YOUR BUSINESS READY FOR END OF YEAR
2014 EDITION
TA B L E O F CO N T E N T S
Introduction
The Quick Checklist
Getting Your Employees Ready
The Checklist for Getting Your Employees Ready
Getting Your Accounting Ready
The Checklist for Getting Your Accounting Ready
Getting Your Taxes Ready
The Checklist for Getting Your Taxes Ready
How ZenPayroll Can Help
1
2
3
5
6
8
9
11
12
INTRODUCTION
The end of year can be a very stressful
time for you and your business. That’s
why we wanted to help take some of the
anxiety out by providing you a helpful
guide on how to get your business ready
for the end of year.
We’ve broken this guide into three
pertinent sections for your business:
employees, accounting, and taxes.
Each section includes detailed to-dos,
best practices, and common areas of
concern. We also provide a printable
checklist in each section so you can
quickly stay on top of things.
At ZenPayroll, we try to make payroll
easy and delightful. We believe many
of the anxieties for your company’s end
of year preparation stems from legacy
processes and confusing information.
With this guide, we hope to help small
business owners like you navigate the
ins and outs of getting your business
ready for end of year.
1
GETTING YOUR EMPLOYEES READY
VERIFY EMPLOYEE DATA
Verify employee name
Verify employee address
Verify employee Social Security number
File W-2
VERIFY EMPLOYEE BENEFIT INFORMATION
Confirm retirement plan eligibility
Confirm health benefits (and imputed wages)
Confirm fringe benefits
Review sick time
Review vacation time
Review deferred compensation
VERIFY CONTRACTOR INFORMATION
Verify contractor name
Verify contractor address
Verify contractor identification number
File 1099
END OF YEAR EXTRAS
Grant year-end bonuses (if any)
Appreciate your team!
GETTING YOUR ACCOUNTING READY
PROFIT & LOSS REVIEW
Categorize your expenses
Look for anomalies
Review P&L again after adjustments
COLLECT W-9S
Collect W-9s from vendors and contractors
Issue 1099s for contractors (ZenPayroll will do this
for you) who you’ve spent $600 or more for services
GATHER AND ORGANIZE YOUR RECEIPTS
Gather receipts
Organize receipts by category
Copy down your thermal receipts
RECONCILE YOUR BANK ACCTS AND CREDIT CARDS
Check end-of year bank and credit statements match
your financial statements.
Match your accounting software ledger balance with
your accounts
ACCOUNTS RECEIVABLES AND INVOICES
Collect outstanding invoices before year-end
Check your Days Sales Outstanding to see if there
areas of concern
TAKE PHYSICAL INVENTORY
Match physical inventory with balance sheet
Appraise current value of inventory
GETTING YOUR TAXES READY
HOME OFFICE DEDUCTION
Check to see if you qualify
Calculate your deduction
VEHICLE AND MILEAGE DEDUCTION
Calculate your deduction at $0.56 per mile
Deduct additional costs like parking fees and tolls
TRAVEL EXPENSES
Collect your travel information including plane fare,
lodgings, meals, taxis, fees, tips
THE QUICK CHECKLIST
2
GETTING YOUR EMPLOYEES READYThe end of year is an important
time for every company, especially
for your employees. As a business
owner or employer, there are a
multitude of things you have to get
done to make sure your employees
are ready and compliant for the end
of year. That’s why we put together
this checklist to help you get your
employees ready for end of year.
1
3
1. VERIFY EMPLOYEE DATA
It’s important to review employee data for the end of
the year, particularly with employee names, addresses,
and Social Security numbers. Improperly filing this could
lead to penalties for each mis-filed W-2. Check with your
employee to make sure his or her employee information
is correct.
If you’re still not certain about your employee’s Social
Security number or just want to get it verified, the IRS
provides employers with the Social Security Number
Verification Service (SSNVS) to minimize employee
name and SSN mismatches.
You can access all this information on your ZenPayroll
dashboard for employers and employees. ZenPayroll will
automatically calculate and electronically file your W-2s,
but you can access it anytime. The deadline to furnish the
W-2 is on February 2.
Don’t forget you have to verify employee data for both
active and terminated employees.
2. VERIFY EMPLOYEE BENEFITS
We often set and forget employee benefits. But the end
of the year is an important time to verify your employee
benefit information for your employees.
For most retirement benefit information, like your 401(k),
you’ll want to give advanced notice of benefits, like
enrollment features and withdrawal provisions to your
employees. If your company matches, your employees
may want to fully fund their plan by the year-end. The
limit is $17,500 per employee and the catch-up for
employees over 50 is $5,500. For more information on
retirement plans for small businesses, check out the
IRS’s page on 401(k) for small businesses.
For health benefits, you’ll want to confirm your employees
have selected and contributed to their respective health
care plans. For employees on a Flexible Spending Account
(FSA), make sure your employees have spent the money
in their FSA before the end of the year (or the grace
period), or else they’ll lose any money in their FSA.
If your plan has a $500 carryover option, let your emp-
loyee know.
If you’ve offered fringe benefits to employees, you’ll
want to make sure you’ve withheld taxes for any taxable
benefits your employees have received throughout the
year. This includes fringe benefits such as: personal use of
company car, employer provided parking, and employer
provided cell phones.
Some of these fringe benefits may be considered imputed
wages. An imputed wage is additional income typically
associated with a service. A popular form of imputed
wages that requires an end of year adjustment is group
term taxable life insurance coverage over $50,000.
For more information on taxable fringe benefits, check out
IRS Publication 15-B.
For more benefit related content, check out SHRM’s Year-
End Checklist for Retirement and Health Plan Sponsors.
Finally, be sure to confirm all sick and vacation time spent
by your employees. If your employee has sick pay, you’ll
want to make sure it’s been withheld properly. Generally,
sick pay is withheld like normal wages and you have to
withhold taxes for employee and employer social security,
Medicare, and Federal Unemployment Tax Act (FUTA).
There are some exceptions so check the IRS for the full
list. For some companies that have a rollover, you’ll want
to count what dates are available for next year.
Deferred compensation can also be tricky. Your emp-
loyee’s wages may be taxed this year if it does not meet
the requirements of Section 409A. Check the IRS site
for more information.
3. VERIFY CONTRACTOR INFO
You’ll want to make sure all your contractor information
is in one place. Like with employees, you’ll want to verify
your contractor’s name, address, and identification num-
ber. The ID number can be a contractor’s SSN, ITIN, ATIN,
or EIN. For information on how to fill out the 1099-MISC,
check out the IRS page.
As with your W-2s, ZenPayroll will electronically file all
1099-MISCs for you and send them to your contractors.
You’ll have them available at all times on your dashboard
as well.
If you’re switching payroll providers to ZenPayroll and
you run payroll before the end of the year, we can manage
your current year’s contractor 1099s. Of course, be careful
you don’t double file your 1099s with another provider.
4. END OF YEAR EXTRAS
There are always a few loose strings at the end of the year
you’ll want to watch out for. In particular, the end of year
is a popular time to give bonuses.
With ZenPayroll, we recommend giving bonuses through-
out the year with our spot bonus feature. But if you plan
on giving them out at the end of year, be sure the bonus
has its taxes withheld.
Finally, there’s no better time than the end of year to
appreciate your team. Of course we’d hope you’re doing
this throughout the year too, but now is the time to plan
a company holiday party or white elephant gift exchange.
4
DIFFERENT BONUS TYPES!
Don’t just make it about money! Try giving
something that your employee can find
useful. For example, at ZenPayroll, on your
second year anniversary, you receive a
great laptop backpack.
Give gifts for their friends & family. Send
your employee monthly flowers or a gift
certificate for two at a nice restaurant and
help bring the good cheer to their home.
Let them give back to the community.
With ZenPayroll Giving, you can give dir-
ectly to your favorite charity right in app!
Give them a new experience! Your emp-
loyees may love a free wine-tasting class
or trip abroad. At ZenPayroll, we give a
free ticket to anywhere in the world on an
employee’s one-year anniversary.
Give praise. One of the most neglected
but effective ways to show your gratitude
is praising your employees in front of their
peers. It is a great motivator and can really
bring a lot of satifaction.
CHECKLIST 1 : GETTING YOUR EMPLOYEES READY FOR END OF YEAR
1. Verify Employee Data
Verify employee name
Verify employee address
Verify employee Social Security #
File W-2
2. Verify Employee Benefit Info
Confirm retirement plan eligibility
Confirm health benefits
Confirm fringe benefits
Review sick time
Review vacation time
Review deferred compensation
3. Verify Contractor Info
Verify contractor name
Verify contractor address
Verify contractor identification number
File 1099
4. End of Year Extras
Grant year-end bonuses (if any)
Appreciate your team!
5
GETTING YOUR ACCOUNTING READYOne thing that is important to do
at the end of the year is to close
your books. That’s why we put
together a check-list of the most
common accounting to-dos for the
year-end. Whether you work with
a CPA, bookkeeper, or just DIY,
this checklist should help get your
accounting ready for end of year.
2
6
1. PROFIT & LOSS REVIEW
The first thing you should do before and after this
checklist is review your profit and loss statement.
It’s a good reminder to see how you’re spending your
money but also if your expenses are categorized.
Fortunately, if you use an online accounting provider
like Xero or Freshbook, they can sync directly with
your bank account or credit card statement and help
you categorize your expenses.
Return to your P&L again after you reconcile your
bank accounts, receipts, and other potential concerns.
2. COLLECT W-9S
Did you use vendors this year? If so, you’ll have to
collect W-9 forms for each of them. The W-9 form
can be used as a paper trail for the IRS to track your
expenses. It’s also a way for the government to keep
track of vendors and their income.
For every vendor you’ve spent $600 or more for ser-
vices, you’re required by law to issue and complete
a 1099 form. The 1099 must be filled out by January
31 and sent to the IRS by February 28 (or March 31)
if you file electronically. Fortunately, your accounting
software solution will likely have a line item for all
1099 vendors and contractors. In addition, ZenPayroll
will file the contractor 1099s on your behalf.
3. GATHER AND ORGANIZE YOUR RECEIPTS
It’s important to gather and organize your receipts.
A shoebox of receipts is the last thing your CPA wants
to see. An easy way to organize your receipts is to use
a software solution, which syncs with your credit card
or bank account. That should help you account and
categorize many of your expenses, which helps you
reconcile your paper receipts. Be sure to copy down
your thermal receipts because they have a tendency
to fade too.
4. RECONCILE YOUR BANK ACCOUNTS AND CREDIT CARDS
The end of year is important to make sure what you
have in your financial statements match up with
your bank and credit card accounts and your year-
end statements. If you are using online accounting
software, it’s important your ledger balance matches
as well.
5. CHECK PAYROLL
A payroll provider like ZenPayroll should have with-
held taxes for your employees throughout the year.
However, there are a few common areas to watch
out if you’re worried about end of year accounting.
We’ve covered this the prior section but they include
withholding taxes for fringe benefits, deferred comp-
ensation, and end of year bonuses.
6. ACCOUNTS RECEIVABLES AND INVOICES
There’s a tendency to forget to collect on your in-
voices if you don’t use invoicing software. Without
a good collection system, you may have checks “lost
in the mail.” Read our piece on How to Master Small
Business Accounting in One Week to learn more about
invoice collection throughout the year. For end of
year, manage your Days Sales Outstanding and follow-
up with your invoices more than a few weeks out.
Of course, collecting on your accounts receivable
is good practice year-round.
7. TAKE PHYSICAL INVENTORY
For some of you, there’s no need to take physical
inventory. For others, getting an accurate account
of your inventory is important. You’ll want to match
it with your end of year balance sheet. It’ll also be
helpful for your bookkeeper, especially to know how
much you’ve spent on inventory throughout the year
and its current value. To determine the value, you can
use the gross profit method or the retail method.
As always, refer to your tax specialist, accountant,
or bookkeeper for counsel. All information listed
here is for the 2014 tax year.
7
CHECKLIST 2: GETTING YOUR ACCOUNTING READY FOR END OF YEAR
1. Profit & Loss Review
Categorize your expenses
Look for anomalies
Review P&L again after adjustments
2. Collect W-9s
Collect W-9s from vendors and contractors
Issue 1099s for vendors (ZenPayroll will do
this for you) who you’ve spent $600 or more
for services
3. Gather and Organize Your
Receipts
Gather receipts
Organize receipts by category
Copy down your thermal receipts
4. Reconcile your bank accounts
and credit cards
Check your year end bank and credit statements
match with your financial statements.
Match your accounting software ledger balance
with your accounts
5. Check Payroll
See checklist on Employees
6. Accounts Receivables and Invoices
Collect outstanding invoices before the year-end
Check your Days Sales Outstanding to see if
there are areas of concern
7. Take Physical Inventory
Match physical inventory with your balance sheet
Appraise current value of inventory
ALMOST ACCOUNTANTS!
Mick Jagger: The frontman of the
Rolling Stones attended the prest-
igious London School of Economics
on scholarship. He studied accounting
and finance but after reuniting with
his childhood friend, Keith Richards,
decided being the biggest rock star
in the world was a better career move.
Chuck Liddell: The former Light Heavy-
weight champion of the UFC may have
as easily gone from MMA to CPA.
Chuck graduated from California Poly-
technic University with a Bachelor of
Arts Degree in Business/Accounting
in 1995.
Cris Carter: The Hall-of-Fame wideout
is known for catching touchdowns.
In an alternate universe, Cris could’ve
been catching accounting mistakes.
In an interview with the StarTribune,
he said: “I always loved math in high
school and I thought that I would be an
accountant. But I also thought I would
be better at counting money in the NFL.”
8
GETTING YOUR TAXES READYDoing your own corporate taxes can
be challenging. There are a number
of deductions and rules you’ll want
to consider so you can minimize
your tax burden. Don’t wait until
April to get your company taxes
in order. We selected a few of the
most common areas of concern
for small business owners and put
them in this helpful checklist.
3
9
1. GO OVER YOUR BOOKS
There’s no better time to go over your books to check
your P&L statement for any red flags, particularly if
you work with a bookkeeper or accountant. While
you can always make adjustments in the future, take
time at the end of year while some of the context is
still fresh. See the prior section for more accounting
concerns.
2. GATHER AND ORGANIZE YOUR RECEIPTS
As we mentioned previously, expense reporting can
be a real challenge in April if you’re opening a shoebox
of receipts. The IRS may audit your filing for up to
six years, so it’s recommended you keep a record of
your receipts for at least that long. Most accounting
software providers can even help you categorize
your expenses automatically. See here for some rec-
ommended vendors ZenPayroll integrates with.
3. HOME OFFICE DEDUCTION
One of the most popular deductions for small
business owners (and yet not taken) is the home
office deduction. The IRS provides two methods
for calculating your home office deduction, simp-
lified and regular. Since most entrepreneurs will
use the simplified option, we’ll cover that here.
First, you’ll have to qualify for the deduction. If you
meet the two main criteria 1) Regular and Exclusive
Use and 2) Principal Place of Your Business, then
your business is eligible. Check the IRS site for more
information.
The simplified option uses a standard $5 per square
foot (rather than actual expenses determined by
records) to determine the deduction. To calculate
your deduction, you simply multiply the portion of
your home dedicated to home office use (capped at
300 square feet) by $5 to get your deduction, which
is capped at $1,500 (300 x $5).
Check the IRS site for updated information.
4. VEHICLE AND MILEAGE DEDUCTION
For some small business owners, operating a vehicle
is part of their daily work. The IRS allows you to deduct
your mileage based on two methods, actual cost or
standard mileage rate.
The actual cost method requires you to keep detailed
records of your business-related expenses, which is
prohibitively difficult for many of us. If you choose to
take the standard mileage method, the standard rate
is 56 cents per mile for business miles driven in 2014.
In addition to mileage, you may deduct additional
costs like parking fees and tolls. See here for more
information on transportation related deductions.
5. PAYROLL TAXES
The end of year is a great time to gross up any fringe
benefits for tax withholding purposes if they were not
filed throughout the year. Fortunately, ZenPayroll can
help you do this within our service. Check out our earlier
section on how to get your employees ready for the
end of year for more information.
6. TRAVEL EXPENSES
Do you travel frequently for work? If so, you may be
eligible to deduct the cost of the trip, including plane
fare, lodging, meals and incidental expenses such as
taxis, fees and tips. For more information on travel
expense deductions, check out the IRS site.
There are even more tax savings you may be
eligible for. Check out the IRS site for more
information on credits and deductions and
Publication 463, information on Travel, Entert-
ainment, Gift, and Car Expenses.
10
CHECKLIST 3: GETTING YOUR TAXES READY FOR END OF YEAR
1. Go Over Your Books
See checklist on Accounting
2. Gather & Organize Receipts
See checklist on Accounting
3. Home Office Deduction
Check to see if you qualify
Calculate your deduction
4. Vehicle & Mileage Deducation
Calculate your deducation at $0.56 per mile
Deduct additional costs like parking fees
5. Payroll Taxes
See checklist on Employees
6. Travel Expenses
Collect your travel information including
plane fare, lodgings, meals, taxis, etc.
SOME FUN TAX FACTS!
Aruba has the highest income tax in the
world with up to 58.95%.
In 1660, England placed a tax on fire-
places. People covered their fireplaces
with bricks to conceal them and avoid
paying the tax.
In 1705, Russian Emperor Peter the Great
placed a tax on beards, hoping to force
men to adopt the clean-shaven look that
was common in Western Europe.
New York City places a special tax on
prepared foods, so sliced bagels are
taxed once as food and again as prepared
food, thus creating a sliced bagel tax.
Pennsylvania has a tax on coin-operated
vacuum machines at gas stations.
“The hardest thing in the world to
understand is the income tax.”
—Albert Einstein
11
HOWZENPAYROLLCAN HELPThe end of year can be stressful. With ZenPayroll,
running payroll doesn’t have to be. We make sure
your end of year payroll is easy. That’s why we
calculate, pay, and file your payroll tax filings for
you. We built our software with small business
owners in mind, because we know you’re already
busy growing your business.
For more information on how ZenPayroll can help
you, check out the following resources:
ZenPayroll Blog: This is our ongoing corporate blog
that covers the latest small business best practices,
updated multiple times a week.
ZenPayroll Resources: Here are some of resources
to help businesses like yours with funding, prod-
uctivity, compliance, accounting, and more.
ZenPayroll Customers: See what other ZenPayroll
customers are doing to grow their business.
JOIN ZENPAYROLL TODAYAND GET YOUR FIRST TWO MONTHS FREE
“ZenPayroll has been a lifesaver. I don’t have to
worry anymore and all my back office loads are
fixed with a push of a button — that’s special.”
—Tristan Walker, Bevel
12
www.zenpayroll.com • (800) 936-0383
13