7 Payroll Items to Check Off Your List Before the Year Ends From preparing for performance reviews to organizing receipts for taxes, an early start now will avoid headaches later.
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As the end of the year approaches, so does tax season.
To begin wrapping up the year, startups and small businesses should perform a status check on business finances and prepare year-end reports to ensure tax season is a breeze.
Additionally, startups and small businesses have many cost-cutting advantages they may not be aware of when it comes to taxes and spending.
Here are some items to check off the list before the end of this year:
1. Prepare for performance reviews
This one's first on the list because it's the most immediate priority. Employee performance reviews are often given at the end of the year and have a big impact on an employee's future performance manipulating factors like motivation, engagement, and morale.
Don't leave this one to the last minute to ensure a quality review that will really give employees a complete picture of what they do well and what needs improvement. It will truly affect the direction employees take moving forward. Plus, it will help determine and prepare for raises early on.
Begin analyzing performance data now to accurately assess individual performance. I always suggest automating performance management with a software that collects data by tracking task and goal completion throughout the year for a painless process.
2. Check on benefits
Since the passing of the Affordable Healthcare Act, many startups and small businesses opted not to offer employee health insurance benefits. The new healthcare program provides discounts for workers whose employers don't offer benefits, so many thought it wise to cut out that expense.
However, healthcare or insurance benefits might prove to be a valuable benefit for some startups to offer, depending on the needs of the employees. A startup can even offer a stipend to cover an employee's individual discounted plan as part of a salary. In either case, now is the time to research benefit options as healthcare and insurance continue to evolve.
3. Research new perks to offer
Startups and small businesses often have the benefit of offering perks larger organizations cannot due to volume of employees or structure. Consider offering employees unique perks in place of traditional benefits. Examples of perks can include fitness memberships, discount cards, office additions such as new break room features, free catered meals, and more.
Begin researching options now so the new perks can be decided upon and unveiled as a surprise at the beginning of the new year. Perks can even be low-cost. Perks like award programs and work from home days are often appreciated more than money.
Related: 3 Perks That Work in Lieu of Raises
4. Pull financial statements
It can be easier for small businesses to track and report spending throughout the year, but at the end of the year, it's time to collect everything and look at the big picture. Again, this is an area that can be automated with software, which I'd highly recommend.
A few things to determine are the company's net worth and credit score to see overall financial health for budget planning. Also, look at last year's budget. Did it stay on track? What are some areas that need adjustment?
Check credit cards to ensure interest levels aren't too high and any options for interest reduction. Also, check the balance of any credit card benefits like cash back or travel points to use for next year.
5. Organize extra expenses and reimbursements
Collect all receipts from business-related purchases from employees. Categorize them and file them in a place where they will be easily accessible for tax time. Use a software to scan receipts into a digital document storage platform. When it comes time to determine write-offs, all receipts will be organized in digital form for easy access.
6. Determine tax write-offs
Small businesses are often eligible for several tax deductions owners often miss. Contact a tax professional early to discuss business-related expenses like transportation, entertainment, meals, educational courses and office supplies.
Startups also have the advantage of writing off expenses that got their business off the ground. As long as the business was making sales at the time, it counts. Businesses can deduct up to $5,000 the first year.
If the majority of the year's tax write-offs are documented now, it will require less effort to add the rest during tax time.
7. Plan distribution of important forms
Ensure employees receive important forms on time by collecting and planning distribution early. Perform an audit on employee files to organize existing forms and see if any additional are need for the file.
Keep track of important tax due dates. For example, fourth quarter payroll reports need to be filed the last day in January. Employees need to turn in new W-4 forms by February 17, 2015. Be sure to have all forms on hand and collect them a week to two weeks before they need to be filed to keep things stress-free.