Stay on top of your year-end payroll to set your organization up for success in 2021.
Year-end is a very busy time for payroll teams, and it can become very chaotic if employers don't prepare properly. To help you make this the most wonderful time of the year instead of the most dreaded, here is a checklist of things you can do to help your year-end payroll processes run smoothly.
Have employees check their personal information to ensure accuracy. Items that should be reviewed include:
- Spelling of Name
- Home Address
- Social Security Number
- Email
Ensure new 2021 rates/wages are loaded in your payroll platform:
- Social Security 2021 wage limit: $142,800
- FSA limit: Remains at $2,750
- 401K limit: Remains at $19,500 for employee contributions with an additional $6,500 for catch-up contributions for employees age 50 or older. However, the maximum contribution limit (employee + employer) did increase by $1,000 to $58,000 (or $64,500 for employees age 50 or older).
- Many states have increased their minimum wage effective January 1, 2021. Check the specific states you have employees in to ensure you are in compliance with all minimum wage requirements. Also look at the local level, as some local areas are more strict than the state.
- For example, California's minimum wage is increasing to $13.00 per hour for employers with up to 25 employees and $14.00 per hour for those with 26 or more employees. However, in Los Angeles, the minimum wage is $14.25 for employers with up to 25 employees and $15.00 for those with 26 or more employees (until July 1, 2021, when the rates increase again)
- State unemployment insurance (SUI) rates: Make certain your SUI rate(s) did not change. You should receive a notice each year from the states you are registered in with your upcoming year's SUI rate.
- Get new updated rates for your 2021 healthcare benefits (only for Open Enrollment on January 1).
- Double-check that your employer Social Security deferral stops on the first payroll run in 2021 if you elected to defer under the CARES Act.
- If you allowed your employees to defer their portion of Social Security, make sure that the repayment plan is set up on the first payroll run in 2021.
- Ensure all FFCRA credits and other CARES Act credits are accounted for in your 2020 941 filings.
- Check with your accounting department that all the payroll accounts are reconciled and there are no outstanding liabilities that need to be processed.
If you are proactive on these items, year-end will be smoother for you, your employees and your accounting team!
If you have any questions or need some help, reach out to our payroll expert, Tasha Clark
