With 2023 year-end behind you, now is the perfect time to reflect on how it went and to identify opportunities for improvement. Whether you adopt new tools and technologies, bring on talent to alleviate workload, or roll out more streamlined processes, there are many effective “optimizations” to pursue. But, before you invest time or money on these fixes, you need to understand where and what you need to improve.
Improving your year-end process starts with the right questions
Part of improving your year-end process involves reflecting on how the previous year-end went. Ask yourself questions about your 2023 year-end to help identify what you need to solve for this year. Here are a few questions to get you started:
Year-end questions specific to payroll
- Timely payrolls: Did payrolls get delivered on time to employees? If not, it's important to understand why you were behind schedule. Perhaps you overlooked a bank holiday that set you back, or you simply need additional help for year-end. If you're using a payroll provider, make sure to update the holiday tables in the payroll system to ensure proper pay dates.
- Bonus payrolls: Review your bonus payrolls, and assess if everything went according to plan. Did employees get paid when you intended? If not, evaluate if you need to schedule bonus payrolls sooner. If you rely on another person or department to approve payrolls before they are paid, figure out if there’s a way to accelerate this process or get a seat at the table. If the payroll department needs to be notified of bonuses sooner, confirm timing requirements.
- Bonus process: Did employees prematurely see bonus amounts on their regular paychecks when it should have been on a separate payroll? If so, make a note to schedule bonus payroll runs separately from regular payroll runs.
- Year-end adjustments: Were all year-end adjustments processed on or before your last payroll of the year? If not, determine how you can prevent missed or late adjustments from coming through. W-2Cs can be costly and time consuming to process.
- Adjustment updates: If there are any new adjustments that you know will come up next year, make note of them. If you use a payroll system, request that the adjustment, earning or deduction code be added to the system as soon as possible.
- Recurring adjustments: Are there any unique adjustments (e.g., group-term life insurance (GTL), employer portion of health insurance, gifts, awards, nonaccountable business expense reimbursements) that you made and may need to repeat? Documenting these items can help.
- Regular taxable payments: Are there regular taxable payments that are processed through accounts payable (e.g., tuition, reimbursements, health club dues)? While you will still want to confirm at year-end what was actually processed, be proactive and ask your accounting or HR department if you should plan for any “regulars” this year.
- Payroll provider fees: If you use a payroll provider, did you receive any late fees from them? If you didn’t submit your payrolls or year-end adjustment payrolls on time, you may have encountered a fee for expedited processing. Set reminders to avoid this moving forward.
- Agency penalties: If you encountered any penalties from the IRS or state agencies, make sure you understand why. Perhaps you didn’t notify your payroll provider or a colleague about changes to your filing frequency or state unemployment rates.
- W-4 collection: If collecting W-4s is painful, determine if there’s an easier way to do it. Would processing them online be more efficient?
- W-4 filing updates: Do you remind employees to file a new Form W-4 if their filing status, exemption allowance or exempt status has changed since their last W-4 filing? Consider setting up automated reminders so this is baked into your process.
- Incorrect checks: If you had to reissue lost or incorrect checks, ensure you have a process in place for voiding the original check.
- Year-end accruals: Did you pull a report with your final accruals balance as of Dec. 31? Print and save this for your records.
- Year-end processing: Was year-end processing delayed due to waiting on a third-party sick-pay administrator? If information you're waiting on becomes available after you complete your year-end duties, have a system in place so you remember to process everything. A simple calendar reminder can help!
- Payroll system updates: Talk to your HR department to confirm you have the most recent benefit-plan rates, and verify that they’re updated in your records or payroll system. By doing this, you can be confident that the first payroll of the new year will be accurate. To give yourself adequate time to update benefit-plan rates for employees, schedule your open enrollment period months in advance of year-end.
- Pain points: Take note of any particularly stressful points or pitfalls with running your last payroll of the year, and determine how to improve the process.
Year-end questions related to W-2s and 1099s
- Up-to-date forms: Do you have undelivered or returned W-2 and 1099 forms? If so, adjust your process or work with your HR department to ensure all current and terminated employee information (e.g., address and name changes) is up to date in your records or payroll system before you finalize your last payroll of the year.
- Document storage: If former employees or contractors come looking for W-2s or 1099s that were sent to the wrong address and returned, do you know how to locate them? To ensure all documents, including W-2s are delivered promptly to the correct address — and stored correctly in your system — remind terminated employees in their exit interview to update their addresses if they move. Provide them with an email address so it’s easy for them to provide this information.
- Accurate records: Do you routinely need to file a Corrected Wage and Tax Statement (Form W-2c) for employees? Why do you have incorrect W-2 information and how can you ensure this doesn’t happen each year? Is there a dedicated person in charge of updating employee information?
- Secure recordkeeping: If any employee information was compromised, revisit your recordkeeping practices. Store employee information in a designated, secure location and have a trusted employee or partner generating W2s and 1099s.
- Delivery efficiency: If the delivery process for your W-2s or 1099s was inconvenient or a hassle, figure out what caused the breakdown in efficiency. Perhaps it’s time to explore an alternative delivery method like electronic delivery. Just check your state laws for any regulations that impact delivery — and ask your payroll provider about an electronic delivery option.
- Regulation updates: Are you up to speed on minimums, maximums, and other regulations around social security, 401(K) plans, health savings accounts (HSAs), and flex spending accounts? If this information wasn’t released yet, make sure to look for updates.
- Effective communication: If there were any communication gaps between you, your employees or partners, make sure you understand what caused them. For example, did employees know when they should expect bonuses? Be transparent in your communication, and share all required information with internal teams and partners. To help with employee communication, check out what communication features and functionality are available within your human capital management (HCM) solution.
- Training opportunities: Find out if additional training from your partners or technology vendors is necessary. See what kind of training opportunities are available through your payroll provider and what the associated costs are. Certain HCM solutions, like UKG Ready, have a learning management tool within the system that allows any user (at no additional cost) to browse training resources and courses on a variety of system topics.
- Workflow efficiency: What inefficiencies existed and how can you improve them? Regroup with colleagues and partners to determine where certain breakdowns occurred. Consider how to improve your internal processes, and whether technology is necessary to automate time-consuming tasks. If you do have technology to help, be sure you are using it to the fullest potential.
Turning year-end learnings into solutions
The questions you ask should unlock issues that need solving or nuances that you need to keep in mind for the next year-end. Last-minute projects, corrections and ongoing inefficiencies can be costly to your organization. Knowing where your breakdowns are occurring will put you in a better position to improve, adjust processes, bring on the right tools and technologies to help — and ultimately find solutions that meet your exact needs.
There are many ways to turn your year-end learnings into solutions. For example, establishing a year-end project team can help. Each year this team can evaluate the outcomes of your year-end questions and agree on the best solutions. If technology and outside partnership are part of that solution, B2E Solutions can help. Our full-suite HCM platform, and our team of experts, have been making year-end faster and easier for organizations since 1993.
To learn more about how we can help, contact us today.
Note: This post was originally created on July 21, 2020 and has been updated to reflect the most recent tips and advice for year-end.
