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December 11, 2017

Payroll Year-End Prep Checklist

If you’re not already preparing for year-end, it’s time to start looking at some items that need to be considered for payroll purposes. Before we know it, the new year will be here! So as you finish up payroll this year, keep in mind the following items:

  1. Employee Data – Confirm identifying employee (both inactive and active) information, such as address, ssn, name, etc for W-2 purposes.
  2. Year-end Bonuses – If you offer bonuses in December, note whether you’d like the amounts to be considered gross or “grossed up” for the required FICA/Medicare taxes. For example, a gross $1,000 bonus (paid at an employee’s current withholding) will handle taxes differently from a net $1,000 ($1,082.84 gross) bonus. Please let us know these amounts before your last payroll of the year or before December 29th.
  3. Year-end Adjustments – These year-end adjustments include, but are not limited to, S-Corp Shareholders Health Premiums, personal use of company automobile, 3rd party sick Pay. Anything you need to include outside of your normal payroll, let us know for your last payroll of the year or before December 29th to make the adjustments.
  4. Tax Rates – Provide us with your SUTA Tax Rate Notice (State Unemployment Rate) for 2018.
  5. Deposit Requirements – In October of every year, the IRS determines if a change for the next calendar needs to be changed, depending on the total tax liability in the company. The company either pays these taxes monthly or semi-weekly, depending on what the IRS has determined. If you have received a notice that indicates your “deposit requirements for Form 941” have changed for 2018, please forward the notice to us.
  6. Time Off Accrual/Balances – Confirm employee PTO/vacation/sick balances. Take note of sick days, vacation time, and other allowed time off, carry over rules, depending on your company’s policies.
  7. Employee updates – Have employees review their withholding allowances before the new year. Please let us know of any new pay-rates or deductions that are effective for the new year.

As you are making plans, prepping for the holidays and other year-end items, we hope this payroll year-end checklist will alleviate some of the stress during this already busy time of the year. In fact, we wish for you, that this is truly the most wonderful time of year!

November 15, 2017

Bi-Weekly vs. Semi-Monthly Basics 201

Bi-weekly and semi-monthly payrolls are the most common pay frequency among employers. The terms “bi-weekly” and “semi-monthly” can be a little confusing when it comes to payroll. Both prefixes, “bi” and “semi” mean “two or twice” but have different meanings, especially when it comes to scheduled payroll dates. Bi- means “every other” or “every two” while semi- means “half” or “twice” in the sense that it happens two times.

In payroll, bi-weekly means employees are paid every other week, while semi-monthly means employees are paid twice a month. Typically, each month for bi-weekly payrolls, employees also paid twice a month, but two months out of the year, employees are paid three times, instead of two. Confused yet? If you are, hopefully we can clarify a thing or two about the difference of bi-weekly and semi-monthly pay frequencies. Even though they tend to stay together throughout the year, there are several differences and implications in payroll.

Bi-weekly

  • Every other week or every 2 weeks
  • 26 payrolls in a year (52 weeks in a year / 2 weeks)
  • Salaried employees typically work 80 hours each pay period (2,080 hours / 26 payrolls)
  • Hourly employees’ overtime is easily calculated
  • Employees will know it will be (every other) weekday;
  • More consistent and preferred for employees. They know when the payday is coming – (i.e. every other Friday)
  • The number of days in the pay period is consistently 10 workdays or 14 total days (two 7-day workweeks)
  • Less consistent for budgeting for employers and employees, as some months have 3 payrolls in a month & are different dates in the month

Semi-Monthly

  • Twice a month or every half month
  • 24 payrolls in a year (12 months  x 2 times)
  • Salaried employees typically work 86.67 hours each pay period (2,080 hours / 24 payrolls)
  • Hourly employees’ overtime often crosses over pay periods. Sometime that means extra work for those calculating payroll hours (contact us to learn more about how our timekeeping solutions can solve this issue for your company)
  • Employees are typically paid on the 15th/End , 10th/25th of the month, etc and they fall on different days of the month (depending on month, weekends, holiday, etc)
  • The number of days in the pay period changes depending on day of month; it might be 16 days or 15 days, depending on how many days are in the month (31 days, 30 days or 28/29 days in February)
  • More consistent for budgeting for employers and employees; it works great for paying bills (as paydates are always on the 15th for instance)

Just remember, a bicycle is a cycle with 2 wheels, and in payroll, biweekly means you’re paid every 2 weeks. And while we’re on the topic of transportation in Portland, how about those semi-trucks we love driving next to on the freeway? I bet you didn’t know that a semi-truck is a trailer without the front wheels, so about half of it is missing. In payroll, that means you’re paid halfway through the month as well as the final half, depending on your payroll schedule.

Of course, we must not forget about monthly and weekly payrolls. Monthly is once a month, paid 12 times a year, and weekly is once a week, paid 52 times a year. Weekly is the most preferred by employees, but payroll processing cost is the highest, as this requires more times in a year to process payroll, therefore is not very common.