The end of the year is quickly approaching, so it’s imperative to start preparing for your year-end payroll reporting as soon as possible. As you’re probably familiar, the year-end payroll process can be overwhelming for a business owner, with the need to accurately calculate taxes, wages and deductions for all your employees in a short period of time. DM Payroll Solutions has compiled these five tips to ensure your year-end payroll processing goes off without a hitch.

1. Examine Employees’ Information

Since you’ll need your employees’ legal names, addresses, Social Security numbers and marital statuses for Form W-2s, now is the time to audit your employees’ personal information to ensure you’re not missing anything. Having this information readily available is not only convenient for filing, it can also help you to avoid penalties from the Internal Revenue Service (IRS) for inaccurate data. 

2. ACA Reporting Preparation

Under the Affordable Care Act (ACA), employers with 50 or more full-time equivalent (FTE) employees must report health insurance plan information annually with the IRS, including which health insurance options were offered, the cost and the quality of plans. At the end of the year, ACA-eligible employers must file Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) for every FTE employee offered health insurance alongside Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns). To simplify the collection of data for these forms, DM Payroll Solutions outlines the tasks employers should complete throughout the year to remain ACA-compliant here.

3. Make Your W-2 Adjustments

Prior to processing the final payroll of 2021, be sure to evaluate your records and confirm if there are adjustments for third-party sick pay, non-cash fringe benefits, excess group-term life insurance, employee bonuses or other relevant income adjustments. Unreported fringe benefits can have a significant impact on federal income taxes, so it’s better to be safe than sorry.

4. Evaluate Retirement Contributions

Determine the employees who contributed to retirement accounts and if their contributions have been made up to the correct limit. For example:

Type of Retirement Plan	2021 Limits
401(k) Elective Deferrals	$19,500
403(b) Elective Deferrals	$19,500
SIMPLE Employee Deferrals	$13,500
Catch-Up Contributions for Employees 50+	$6,500

Additionally, be sure to note which employees will be eligible for coverage for 2022.

5. Submit Final Payroll and Run Reports

Before submitting your final payroll for 2021, be sure to check the spelling of your employees’ names, their Social Security numbers, addresses and wages one last time. After payroll has been run, close the quarter and file your quarterly Form 941 (Employer’s Quarterly Federal Tax Return) to report your payroll taxes and employees’ wages.

Ready to Help

DM Payroll Solutions understands that year-end can be hectic for a business owner. Fortunately, our payroll system empowers you to access the data you need at a moment’s notice to ensure accuracy on your ACA reporting, Form W-2s and tax filing. We can streamline your payroll operations and manage your related tax payments not just at year-end, but throughout 2022. Contact us today to learn more about our service offerings.