For businesses, the end of the year means handling a long Human Resources (HR) to-do list. For small businesses that do not have an HR manager, the tasks can really begin to pile up. The best way to avoid a last-minute scramble or missed deadlines is to begin end-of-year planning now with a clear list of what needs to be done.
End-of-year HR checklist:
Health insurance: Check the requirements for employer provided health insurance under the Affordable Care Act (ACA). For example, with the passage of the ACA offering health insurance that meets certain minimums is now a legal requirement for businesses with 50 or more full-time employees who work at least 30 hours per week on average.
- Now is a good time for businesses to start counting the number of full-time employees they have, evaluating the current health coverage plan and deciding if they want to make changes to their offering.
- It is time to start gathering paperwork for IRS forms. Employers must provide the IRS with information about coverage offered through Forms 1095-C and 1094-C. Employers are responsible for giving their employees a Form 1095-C by Thursday, January 31, 2019. Employers are required to file copies of Form 1095-C with the IRS by Thursday, February 28, 2019, if filing by paper or Monday, April 1, 2019, if filing electronically (same as Form 1094-C).
- Note that Hawaii has obtained the 1332 Waiver which is valid between 2017 and 2021. This means that the ACA SHOP is no longer required in Hawaii and the ACA SHOP tax credits are replaced by the State’s Prepaid Health Care Premium Supplementation Program.
Payroll: End-of-year payroll review is an important part of preparing for tax time.
- Have each employee verify their payroll information including: name, address, phone number, and social security number. Have employees fill out new payroll forms if anything has changed.
- Once employees have verified their information, it should be compared to the employer’s payroll records.
- Employers should reconcile their payroll accounts and begin preparing to file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, which is due to the IRS by January 31.
- Schedule any special bonus payrolls for the current year.
- Request any special reports needed for end-of-year.
- Order needed payroll supplies including blank checks, payroll forms and blank Forms W-2 and W-5.
- Check that all adjustments have been applied or that an adjustment payroll has been scheduled.
- Confirm that all checks written manually throughout the year have been accounted for and updated in the accounting system.
Wages and taxes:
- Have employees double-check their compensation type, employee contribution amounts and life insurance beneficiaries.
- Verify Hawaii’s employer state unemployment insurance tax rate and taxable wage limit.
- Ensure that other special tax items have been updated and submitted such as dependent care benefits.
- Calculate uncollected Social Security and Medicare taxes for retirees and former employees.
- Verify that tax withholding has been made properly or withheld from the final paycheck for taxable fringe benefits including bonuses, non-cash payments and personal use of company vehicle.
Performance reviews: This is a great time to start preparing for annual performance reviews which are commonly done at the end or beginning of the calendar year.
- Managers or business owners should review employee records over the course of the year so the review is based on performance over a reasonable period of time and not just what happened this month.
- Managers should also prepare to discuss pay raises, the potential for promotions and employee goals within the organization.
Local laws: HR laws change often at the state and local levels and need to be reviewed at the end of the year because changes often go into effect at the beginning of the next year. For example, many cities across the country have recently enacted their own minimum wage higher than that of the federal or state government. Any change in laws that affects company policies should be updated in employee handbooks or online documents.
This post is meant to give a brief overview of end of year HR requirements and is not intended to be a comprehensive list.
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