It's That Time of Year Again!

 


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And no I am not referring to holiday cheer, parties, gifts and the like. And not even ringing in the New Year with its associated celebrations and resolutions. But, as all you bookkeepers and accountants are aware, year end for most companies is right around the corner.

One of the first issues to be deal with no matter the timing of your fiscal year end is all those pesky payroll chores. W2’s to be prepared, proved and mailed. And let’s not forget our favorite year end chore – preparation of 1099’s. If you have been keeping on top of things through out the year, then these processes should not be too onerous.

One thing you should know if you are not using a payroll service, but preparing your W2’s in house is that on the W2 form Box 12 has new two codes this year. Code AA is for Roth Contributions to a 401k plan. And Code BB is to be used for Roth Contributions to a 403 (b) plan.

And don’t forget to report fringe benefits such as cash which includes bonus, severance, vacation or sick pay, and non-cash gifts. These might include concert or sporting event tickets, meals, gift certificates or cards. Remember these benefits are subject to Income, FICA and FUTA taxes. Check with your accountant for the laws in your state as well. You do not need to report employee discounts, working condition fringes or use of employer owned or leased athletic facilities or what are termed as de minimus fringes (you know that free turkey the company gave to everyone). If you have any situation that might be unusual or that you don’t know whether it should fall into the reportable fringe benefit category, then do check with your accountant.

This is also a good time to have your employees review their withholding requirements and to supply W4 forms to them should they need to make changes.

By now you should have reviewed your vendor list and made sure that all subcontractors are marked to receive 1099’s. Your software program should be set to print a 1099 for each marked vendor that has earned $600 or more during the calendar year. You also should have already checked that you have entered the correct addresses and EIN’s for each company/person receiving a 1099. Make sure you verify with the company that the name registered with the IRS for the EIN you have in your files is the same name you will be issuing the 1099 to. For example, if you have been making checks out to John Smith he might have an EIN in his dba (doing business as) name. Or maybe you have been issuing checks to the dba and he is using his personal social security number as his EIN in which case his 1099 must be issued in his name. It is very important to use the matching name and EIN number when issuing 1099's. Otherwise you will be receiving a letter from the IRS requesting you to verify the information and even perhaps asked to withhold backup taxes from your vendor to be submitted to the IRS. Having each vendor make out and sign a W9 form when they begin doing business with you and also at the beginning of each new year will help insure you have the right information. You can get these forms at any IRS office or online at www.IRS. gov. They do not have to be submitted to the IRS as they are for your records only.

The filing dates for W2’s is February 28th however you are required to have mailed the forms to your employee no later than January 31, 2007. These dates are also in effect for filing of 1099’s.

So enjoy your holidays while they are here, for come January 2nd you will be quite busy.

You will be quite busy.

Copyright all rights reserved Bookkeeping R Us 2006

Donna MacMillan, certified QuickBooks consultant and president/founder of MacMillan Associates provides a unique set of services covering all aspects of successful business growth and financial health for all business types and sizes. Offering comprehensive, confidential, and professional services, MacMillan Associates can analyze, design or redesign your current systems to maximize productivity, cash flow and solidify your bottom line.

Bookkeepers R Us is dedicated to honoring the profession of bookkeepers with current news and resources for bookkeepers and businesses. Our articles discuss the everyday details of running a business, career/education opportunities, workplace ethics/behavior, software choices and many other subjects to help you increase your value in the workplace and the value of your business.

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