The start of the new 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 from the previous year. Here are a few things to watch out for you to get your employees ready for the new year.
Get your employee W-2s ready
There are two major deadlines for your employees’ W-2s.
On January 31, 2019, you have to furnish to your employees their copies of their W-2 (Copies B, C, and 2). With Gusto, your employees will receive an email with their W-2s by mid-January. Of course, all their forms will always be available in their account.
On April 1, 2019, you will have to e-file your W-2. If you are using paper forms, the due date is February 28, 2019. With Gusto, we will e-file your W-2 before the due date.
It’s important to review employee data, 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 Gusto dashboard for employers and employees. Gusto will automatically calculate and electronically file your W-2s, but you can access it anytime.
Don’t forget you have to verify employee data for both active and terminated employees.
Get your benefits ready
We often set and forget employee benefits and retirement plans. But the new year is an important time to verify your employee benefit information for your employees and see what needs to be used up, changed, or kept the same.
For 401(k)s, the contribution limit is $19,000 per employee. For employees over 50, they can contribute an additional $6,000 to their 401(k) through something called a catch-up contribution. The due date to catch up your benefits is the due date of your tax return (not including extensions). For more information on retirement plans for small businesses, check out the IRS’s page on 401(k) for small businesses.
For employees on a Flexible Spending Account (FSA), make sure your employees have spent the money in their FSA before the end of the grace period (up to 2 ½ months), or else they’ll lose any money in their FSA. If your plan has a $500 carryover option into 2019, let your employee 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 in 2018. This includes fringe benefits such as:
- Personal use of company car
- Employer provided parking
- 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 all benefit adjustments, you can make them up until you furnish the W-2 to your employees on February 2. However, if you do make a mistake, you can always make a correction to your W-2 with the W-2c. The IRS recommends you make this correction as soon as possible.
Finally, be sure to confirm all sick and vacation time spent by your employees in 2018. 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. Do this before you furnish the W-2 to your employees. For some companies that have a rollover, you’ll want to count what dates are available for next year.
No better time to switch payroll providers
Remember, January is the best time to switch payroll providers. Switch to Gusto today and get your first month free.