Closing out payroll year-end is always a necessary yet challenging process. For small business owners, it’s usually stressful and involves many long hours. There are tight deadlines with no room for errors. In 2020, with the effects of the COVID-19 pandemic, year-end is something that has the potential to be even more complex than usual as new reporting rules have been introduced or changed.
To help you through this hectic time of year, we've outlined these four steps that will help make the process easier and more manageable.
Payroll year-end can be overwhelming, especially if you don’t know where to start. To begin, prioritize each of your major payroll activities by risk factor (high, medium, or low). Be sure to mark a target completion date beside each item. This will not only give a high-level overview of all the tasks to be accomplished, but you’ll also get visibility into the approximate dates for higher risk tasks. Keep your calendar clear for these timeframes as much as you can.
Using the list of payroll activities from step one, make an itemized list of the detailed tasks that must be completed for each activity. As before, include the due date for every required task. Next, determine the time and resources needed for each task and then divide them into manageable parts.
If you have a team of more than one person to help with payroll year-end, label who's responsible for completing each task. If you're a payroll team of one, this list can help you identify tasks that other staff members may be able to assist you with. Planning ahead is key to success, and payroll year-end preparation should take place all year long.
Check the master plan frequently to ensure that tasks remain on track for their target completion date. The key to staying on target is to accurately allow for the time required to complete each task. Be generous with the time you allot and seek assistance where you can. Remember that obstacles will come up along the way, so you may need to be flexible with some deadlines.
During the stage where T4s are processed, always check and confirm all Social Insurance Numbers (SIN), CPP, EI contributions or deficiencies, year-to-date amounts, and manual updates. Also, ensure the code set-up, including earnings and deductions, are routing to the correct T4 box.
Your payroll year-end work is all done once you submit all paperwork and reports to the CRA and Revenu Québec by the appropriate deadlines, as well as ensure all employees have their required tax forms.
Think about what worked well and identify opportunities for improvement for the coming year. Save notes and file lessons learned so that the process can be improved upon. Audit your year-round plan to keep up-to-date and minimize risk.
Leveraging the right technology to process your payroll can make a big impact on your company’s year-end. Cloud-based payroll software that automates processes will help save you time and better understand your cash flow.
Payroll software can also help you stay on top of changing rules and legislation so you can reduce risk and conduct year-round internal audits to ensure requirements are on track.
Complete payroll year-end with more confidence and ease. Watch our year-end webinar or register to attend one of our year-end training courses.