Innovations

Payroll Year End Processes Last All Year!

by Anita Bingaman and Heather Nordberg -Stewart

Year end for Payroll begins each March with a review of the previous year. At that time the Payroll Tax Services team looks at what went well, what could have gone better, and what fires were narrowly averted. Plans are laid for the next year and requests are made to Computing & Communications for system enhancements for the coming year.

What is Payroll year end and why does planning and implementing it take so long? Everyone is familiar with the semi-monthly check run, but have you ever stopped to think about what cumulative effect it has on Payroll’s big picture? The 34,000 paychecks processed twice a month translate into about 52,000 W-2 forms, 1,500 (from the Payroll side) 1042-S forms, 200 1099-R forms and 750 stipend letters. All of these forms need to be reconciled for annual IRS reporting, various state tax agencies, and the Social Security Administration. In addition to all of this reporting, any taxable fringe benefits, such as payment of employee moving expenses, have to be added to gross earnings and applicable taxes withheld. Now you can see why coordination with various offices is required and begins early in the year.

The month of December is a time for parties and days off, but not in Payroll. Phone calls are made to New York to clarify any new income tax filing rules, fingers fly entering data into FAS, and midnight oil is burnt poring over Excel spreadsheets. Thanks to excellent organization and system enhancements, the year end process is nowhere near as difficult as it was in the past, but it still requires hours of intensive work by the accountants in the Payroll Office throughout the year.