With the new year upon us, adjusting to writing 2017 on your personal checks is simply a matter of habit and routine. But for your company’s first payroll run of 2017, preparations are a little more involved.
We rounded up a think tank of OneSource Virtual Payroll experts to provide you with a checklist of five crucial things you’ll need to do, or keep in mind, before processing your first payroll of the year. Some of this may be second nature to you and your team. Some of this could accidentally be overlooked in the scramble between year-end and starting year activities. Either way, you want to make sure these things are done and done right to ensure your first payroll run of 2017 is a smooth one.
1. Review payroll period schedules to ensure they exist for the 2017 calendar year.
“The period schedule is pretty much like the skeleton of payroll,” says OSV Payroll Services Supervisor Cory Milligan.
“If you don’t have a payroll period schedule in Workday,” explains OSV Payroll Supervisor Amber Windell, “you essentially don’t have anything mapped out for 2017. You need to make sure every period schedule you want to use in 2017 has a start, end and pay date.”
In addition to identifying these dates and inputting them in Workday, you also need to coordinate your calendars or work with your service provider to verify that none of your upcoming pay dates fall on banking holidays, as this can prevent employees from receiving their paychecks on time.
Understandably, keeping up with so many dates can prove difficult sometimes. One of the many advantages of having a Managed Payroll service provider such as OneSource Virtual deliver services and support from within your Workday Payroll application is that we have the capability to monitor and identify anomalies before they become serious issues. As OSV Payroll Supervisor Esther Agosta notes, “We’re that extra fail safe for the customer. If something doesn’t seem right, we can say, ‘We’re your partner. We’re going to make sure your payrolls are done correctly.’”
2. If applicable, review any forward accruals on the period schedule for accuracy.
“Forward accruals take into consideration the remaining pay dates for the rest of the month,” says Esther. “A forward accrual is going to estimate how many wages still need to be paid out or considered for that month.”
To minimize potential complications with forward accruals calculations, you should review them well before payroll is processed. “Make sure that you’re doing it at least a day ahead,” Cory says.
Verifying forward accruals is simple. Customers can simply log into Workday and go to the same area that houses their payroll period schedules. “They just need to go in and verify that everything is set up correctly,” Esther says.
“Some companies may not use the Workday system for forward accruals,” she adds. “But for those that do, they definitely want to review them and make sure all the dates they’re using are accurate.”
3. Ensure ledger periods are open for 2017.
Esther recommends that customers set up their ledgers as they are reviewing their payroll period schedules and forward accruals because “they’re all tied into each other.” By ensuring that the appropriate rules are in place for ledgers, you are also ensuring that your accounting rules are set up properly.
“From my experience,” she says, “you want to make sure that ledgers are set up for the entire year, and then go from there if anything needs to be changed or updated.”
4. Review and confirm company level changes, such as state unemployment rates, obsolete tax accounts, and additions to any new required locals.
Regarding payroll taxes, Esther says, “You want to input any kind of rates for taxes as soon as you have them. The later you wait, the more likely it is to cause accounting issues.”
While most payroll software and systems such as Workday perform much of the heavy lifting around payroll taxes by updating federal and state taxes on behalf of their users, it’s still the responsibility of the end user to make sure tax tables are updated and accurate.
“You still want to review that information to make sure there’s not an error,” says Amber.
“You want to make sure all your numbers are correct,” adds Esther. “Especially your EIN numbers and addresses, because they play a part at the end of the year for W-2s.”
Workday Payroll users who receive their Payroll services and support from OneSource Virtual are able to receive help with this, especially in regards to state taxes. “We have a team of specialists who are able to see if these taxes are set up correctly in the system for the company,” Cory says.
Regarding unemployment rates, most states will provide that information, though not always by the first payroll of the year. Those rates can be added to Workday later, but “you want to make sure that you’re inputting those rates as soon as possible,” Esther says, “so our Payroll Tax team can go in and make sure everything’s accurate.”
5. Employees with W-4 exempt elections are required to submit a new election annually. New forms must be submitted by Feb. 15, 2017 or an employee will be setup with a filing status of Single with zero exemptions.
“Typically, if you’re not filing exempt, your form will continue to go forward into the next year,” says Amber. “But if you’re filing exempt, that means no federal taxes are being withheld from your paycheck, so you have to submit new paperwork to claim your status again.”
Amber clarifies that “you should only claim exempt if you didn’t have any federal tax liabilities for the previous year.” Some employees, however, will decide that they’d rather take home a bigger paycheck, even if it means paying more in taxes during tax season.
At the start of a new year, companies are required to notify employees who have claimed this status and let them know that they must file as exempt again.
“Payroll can run a report and see who is marked as exempt and let those employees know they have to submit a new form,” says Esther. “If employees don’t do this by the Feb. 15 deadline, that’s when Payroll has to jump in and change those employees to the status of single with zero exemptions, meaning they will have taxes taken out.”
However, employees who miss the Feb. 15 deadline shouldn’t worry too much. “You can submit a new W-4 anytime,” Amber says. But as with so many leading practices related to Payroll, sooner is always better than later. Payroll problems aren’t just a headache for HR, they can be a headache for your entire team, too. If you haven’t done so yet, make the payroll process headache-free for everyone in your organization by following these steps to prepare your payroll for the new year.
Explore our Payroll Service offerings to learn more about the benefits of having OneSource Virtual as your Workday Payroll services partner.