Updated October 2018.
The end of the year is an important time for every small business. Whether it’s corporate tax filings or company parties, there are a multitude of things to get right before you ring in the new year.
That’s why we put together this checklist to help you get your business—and your employees—ready for 2019.
Verify employee data
- Verify Employee Name
- Verify Employee Address
- Verify Employee Social Security Number
- File W-2 (Gusto does this for you!)
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 misfiled W-2.
Check with your employee to make sure their 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. 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.
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
We often set and forget employee benefits. But the end of the year is an important time to verify your employee benefits information.
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 contribution limit is $18,500 per employee for 2018 and the catch-up for employees over 50 is an additional $6,000. 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 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 throughout the year. 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 more benefits-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. 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 employee’s wages may be taxed this year if it does not meet the requirements of Section 409A. Check the IRS site for more information.
Verify contractor information
- Verify Contractor Name
- Verify Contractor Address
- Verify Contractor Identification Number
- File 1099 (Gusto does this for you!)
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 number. 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.
With Gusto, we’ll manage your contractor information for you. As with your W-2s, we’ll 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 Gusto and if 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.
- Grant year-end bonuses (if any)
- Appreciate your team!
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 employee bonuses. With Gusto, we recommend giving bonuses throughout 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.