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Quarterly and Year End Payroll Procedures

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Quarterly and Year End Payroll Procedures Powered By Docstoc
					                 Presented By:
Genevieve Schulte & Kristal Hamm
      Donna Denker & Associates
 An  obligation that comes into existence
  as a result of past contractual
  commitments or tax legislation
(Payroll Liabilities)
 Need to make sure our obligations are
 recorded properly.

 Need  to make sure they are recorded in
 the right time frame.
   When you process payroll a liability is automatically
    created for taxes due to agencies (IRS, State, etc.)

   These liabilities reside on the balance sheet.

   Compare balances to a report from your payroll
    module and identify any discrepancies.
     • Examples:
        Balances for SUTA and FUTA accumulating
        Adjustments from prior quarters rolling forward
        Payroll check voided AFTER taxes are called in
         (results in a Debit balances in the liability account)
Liability accounts for FICA and
 FIT should “zero” out after
 every pay period!
      Garnishments and Deductions

These follow the same rules as payroll
 taxes and should “zero” out each pay
 period.
Quarterly Payroll Procedures
 Prepare bank reconciliations for quarter.
 Are there any outstanding payroll
  checks?
 How are you going to handle these
  outstanding payroll checks
  • Reissue
  • Wait
  • Void
 Ensure   updates are completed:
  • Print a new circular E (Publication 15) – www.irs.gov
  • Unemployment Rates
     SD Investment Rate is .53%
     SD Surcharge Rate is 0% for Quarters 1 & 2
     SUTA wage base is $11,000
     FUTA (Federal Unemployment Tax Act) wage base is
      $7,000 – If Applicable
     FUTA rate is .8% for Quarters 1 & 2, and .6% for Quarters 3
      &4
  • FICA max ($106,800 Social Security)
 Check   tax deposit dates.

 Did   you make all of your deposits?

 Were   they made on time?

 Were   they applied to the correct quarter?
 Make sure benefit and deduction codes
 are set up properly with respect to pre-
 tax designation (See Publication 15,
 Pages 10-14)
 • Health Savings Accounts
 • 401k Deductions
 • Employer paid fringe benefits
 Health   Savings Accounts
  • Employer contributions are not subject to Social
    Security, Medicare, or FUTA
  • As long as the amount is used for excludable
    expenses
  • Employee contributions
    Included in gross wages
    Unless made in a section 125 cafeteria plan
 401   K Liability (Employer Contributions)

  • Excluded from the employer’s gross income


  • Make sure the liability does NOT affect taxes
    K Deductions (Employee
 401
 Contributions)
  • Pre-tax contributions excluded from Federal
   Income Tax, but included for FICA
    Include contributions in Box 3 & 5 on W-2s
    Include contributions in lines 5a and 5c on Form 941
     (4a and 4c of Form 944)
  • Please See IRC Section 415 for more information
   and Publication 15 B of Circular E
 Fringe   Benefits
  • Vehicles used for commuting to and from work
  • Cash payments
  • Tickets to entertainment and sporting events
  • NOT considered taxable fringe benefits:
     Services provided at no additional cost to the
      company
     Expenses the employee can claim
 Obtain   new W-4:
 Prepare    Forms
 941
   • If a biweekly depositor make sure line 10 equals
    bottom line on Schedule B
  • Schedule B is tax liability NOT taxes paid. This is
    IRS’s cheat sheet.
  • Use 941x for corrections
  • Due Dates
     Monthly depositor is the 15th of the following month
     Semi – Weekly
      Pay date is Saturday through Tuesday, due on Friday
      Pay date is Wednesday through Friday, due on Wednesday
 Penalties
  • 2% to 15% in penalties
  • Will pay interest on balance due as well
  • Separate deposit arrangements
     Deposit payroll taxes in separate bank account
     Will not be able to access
     Will be required to file a 941- M
 SUTA   Form 21
 • Make sure rates are updated
 • Make sure excess wages are correct
 • State has updated online submission. Register
   online at : sd.wagereport.com
 • Rates:
   SD Investment Rate is .53%
   SD Surcharge Rate is 0% for Quarters 1 & 2
   SUTA wage base is $11,000
Year End Procedures
 Compile Following Payroll Reports:
  • Form 941 – Previous 4 Quarters
  • Unemployment Forms – All 4 Quarters
  • Form 940 (If Applicable)

 Prepare   Bank Reconciliation for January

 Prepare Forms
   • Prepare W-2’s and W-3
   • Tie W-3 number to total of all 4 quarters of 941
 W-2 to Employee by January 31st, 2012
 W-2’s and W-3 to Social Security
  Administration by:
  • March 1, 2012 (Paper File)
  • March 31, 2012 (Electronic File)
 State Copies of W-2’s and W-3. (Check
  with each individual state)
 941 and SUTA Reports
  • January 31, 2012
 Includein income in boxes 1, 3, 5, and 12
 on form W-2
  • And on Form 941 and SUTA


            for every $1,000 over $50,000
 Calculation
 of coverage you provide for employees

 Calculation   table found in Publication
 15B
                                               Group Term Life Insurance to Include on W-2
                                                               Face amount      Taxable   Initial date of              Months Age Factor Addition to
                                                                               Amount of
                                     Age at    Face Value of      over          benefit   Policy if after 2011 cancel covered in From IRS  W-2
                                                                               (This is a
   Employee        DOB Year Born 12/31/2011 Life Insurance $50,000            FORMULA) January 1, 2011 date or n/a 2011           Tables

Genevieve Schulte 4/17/1979   1979     32        100,000.00     50,000.00       50,000.00                                12         0.08       48.00


                                                                                            Multiply that by           Multiply that by Age
                                               Take Benefit Over 50,000 and                  the Months              Factor from Publication
                                                   divide by 1,000 = 50                        Covered                15B for a 32 year old.



                                                                                            50 * 12 * .08 = $48.00 on W-2
                                                  Cost Per $1,000 of Protection for 1 Month

                                              Age                                            Cost
                                              Under 25                                       $        0.05
                                              25 through 29                                  $        0.06
                                              30 through 34                                  $        0.08
                                              35 through 39                                  $        0.09
                                              40 through 44                                  $        0.10
                                              45 through 49                                  $        0.15
                                              50 through 54                                  $        0.23
                                              55 through 59                                  $        0.43
                                              60 through 64                                  $        0.66
                                              65 through 69                                  $        1.27
                                              70 and older                                   $        2.06
                                               You figure the total cost to include in the employee's
                                              wages by multiplying the monthly cost by the number of
                                                        full months' coverage at that cost
Facts that provide evidence of the degree of
control and independence fall into three
categories:

   •Behavioral

   •Financial

   •Type of Relationship
 Behavioral
  • Type of instructions given
  • Degree of instruction
  • Evaluation systems
  • Training
  • Set hours
 Financial


  • Significant investment


  • Un-reimbursed expenses


  • Services available to the market
 Typeof Relationship: How the worker and
 business perceive their relationship to
 each other.

 • Written contracts


 • Employee benefits


 • Permanency of the relationship
Are Board and Tribal Council
Members Employees?

  •Tribal   Council-   Employees but not subject to FICA. FIT
  voluntary

  •Appointed    Board Members-           Use category of
  evidence method to determine status.
Stipends  are taxable. Board Members should be
treated as employee’s not Independent
contractors.

IRS Publication 4268 “Employment Tax Desk
Guide for Indian Tribal Governments”
    www.irs.gov
 Uncollected/unreconciled Travel
 Advances for non-employees

 IFthe IRS audits and finds these
 situations you will be assessed penalties
 and interest for failure to issue 1099’s.
• Considered compensation to employees

• Should be included on W-2 and reported on 941,
 SUTA, etc…
    Creates an increased expense for the organization

• Important to reconcile monthly or as frequently as
 possible.
  IRS has indicated that amending returns might be
   necessary.

• If you record an allowance for these, you should
 probably have included it on the W-2.
   SUTA rates will be issued in December

   Health Insurance reporting on W-2 has been delayed
    one year. Not reportable until 2012.

   Social Security withholding decreased by 2% (from
    6.2% to 4.2%) for employees – Employers still pay
    6.2%

   IRS will no longer be sending blank forms out. You must
    retrieve them from the IRS website. www.irs.gov

				
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posted:8/9/2011
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