Ready or not, 2019 is here. As a small business owner, the new year is an important time to set your business up for success, which includes evaluating payroll. Each year, certain information will have to be evaluated for accuracy. Because you’re busy finishing up all of the things for year-end, we gathered a list of a frequently asked questions related to your 2019 payroll.
Q. Why does my employee’s first check of the calendar year have different wages, taxes or net pay when no changes were made to the employee profile?
A. The reason is likely one or more of the following: The employee may have previously met a federal or state tax wage limit which resets in the new calendar year and the taxes are now being withheld. Federal or state agencies made a change to a tax rate, wage base limit, withholding table, or added new taxes. Please visit federal or state websites to review any changes. The employee previously met a limit to a specific earning or deduction which starts over in the new calendar year so the earning or deduction is reflected on their paycheck.
Q. Do I need to update and/or reset my employees’ time off benefits?
A. Many employers set up time off benefits as “use them or lose them”, which means employees must use their time off or risk losing the available days at the end of each year. If like most businesses you offer specific time off benefits within the calendar year, you’ll want to set them up so that at the beginning of a calendar year those time off accruals will change based on your policy.
Q. Do I have to reset my payroll schedule for the new year?
A. The good news is if you use a payroll service, you are likely covered when it comes to resetting your schedule for the new calendar year. Most services will automatically reset your payroll schedule based on the frequency you have decided to pay your employees. The four most commonly used pay frequencies are: weekly, bi-weekly, semi-monthly, and monthly. Depending on where you conduct business, you may get to choose your pay frequency, but your state may also mandate the pay frequency for your business. You’ll also want to note any upcoming bank holidays and plan accordingly if they coincide with a regularly scheduled payday.
Q. When do I need to distribute W2s / 1099s to employees?
A. When it comes time to file taxes, your employees will need to have their W2s and 1099s in hand. There are requirements around when you must issue these forms: employers need to provide W2s / 1099s to employees before January 31.
Q.I got a Notice of Unemployment Rate change – what do I do?
A. While agencies can send out rate notices at any time throughout the year, many do so as one year closes and a new one starts. Common agency notices to look out for are a Notice of Unemployment Rate Change, Notice of Filing Frequency Change, and a Deposit Requirements Notice. These changes will affect your payroll, so it’s important to share with your payroll provider if you have one.
Spending a few minutes evaluating your payroll processes and employee information can ensure that you’re starting the year on the right foot, and helps alleviate the need for adjustments and corrections throughout the year. With payroll and taxes changing every year, it can be confusing and time consuming to keep up. Check in with our first article about tax changes to expect in 2019, which discusses proposed tax brackets and more.
Additionally, year-end is a great time to sign up with, or switch, payroll providers. If you’re interested in getting started with Flat Top Bookkeeping, learn more by reaching out by email to email@example.com or by calling us at (385) 429-2649. We are here to help you!