It’s hard to believe, but the end of 2019 is already upon us.  As part of our commitment to continually support our clients and the small business community, here are some year-end tips on what small employers should watch for to avoid trouble in the payroll and employment world.

Year-End Tips to Avoid Trouble

  • Each year-end, the California Employment Development Department (EDD) mails out “Notice of Contribution Rates and Statement of UI Reserve Account” (Form DE 2088) to inform California employers of their “Employer Unemployment Insurance” and “Employment Training Tax” rates for the coming year.

Watch for this Notice in your mailbox and forward it to your payroll service provider when you receive it. This will help keep you away from penalties assessed by the state for paying taxes at a wrong rate.

  • In light of the new developments in the immigration laws, U.S. Immigration and Customs Enforcement (ICE) recently announced it would establish a new “Employer Compliance Inspection Center.” This will substantially increase the audits of I-9 (Employment Eligibility Verification) forms.

Therefore, other agencies, such as the Department of Homeland Security, Immigrant and Employee Rights Section of the Department of Justice, and the Department of Labor, may also demand to inspect your Employees’ I-9 Forms.

The US Citizenship and Immigration Services (USCIS) requires employers to have a completed I-9 form on file for every new hire. This must be done within 3 days of the date of hire.

Note that the I-9 forms should always be filed separately from personnel files. Active employees should always have a Form I-9 on file.

However, after the termination of employment, the I-9 forms may be disposed of either three years after the date of hire, or one year after the termination date. Whichever comes later.

Retain your Form I-9 files in 3 separate sections:
  • Current employees whose work eligibility documents don’t have an expiration date.
  • Current employees whose work eligibility documents have an expiration date.
  • Terminated employees – Record the date, after which, the I-9 and its documents can be disposed of.

Check the active employees’ documents periodically to ensure they still comply with the “List A” and “List B” requirements of Form I-9.

Keep a record of the expiration dates of the documents. Also, ask the employees to furnish renewed documents, before the old ones expire.

  • Ask your employees and contractors to verify their names, addresses, and Social Security Numbers. This will help you avoid any delays or rejections of W-2 and 1099 forms by the IRS.
  • If you are planning to pay a year-end bonus to your employees, run bonus checks early to allow time for a potential credit review by your payroll service. The amount of the year-end bonus and the regular payroll together could exceed your credit limit and call for a credit review.

If your payroll provider does not approve the bonus, you can always pay your employees by paper check and have your payroll service handle the electronic payment of the resulting taxes.

  • Review federal holiday schedules and make sure to follow your payroll service’s required lead time for a timely deposit of your employees’ net pay.

In Conclusion, follow these tips and you’ll have a smooth transition to the new year!

At Chexperts Payroll Solutions, we are committed to providing you with valuable information regarding rules and requirements around managing your personnel and payroll obligations successfully. To discuss how we can support you, contact us here:

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