The end of the year is approaching. What information do I need to provide to my accountant to close out the year?

Some items that need to be handled prior to the end of the calendar year are:

Taxable Fringe Benefits:

These are items that would need to be included on form W-2.

1. Personal use of company owned or leased vehicles.

The Internal Revenue Service requires that employers keep adequate records of the personal and

business use of company vehicles. These records must be kept for virtually all cars and light trucks

including leased vehicles.

2. Medical insurance premiums for S corporation's "share-holder employees".

3. Tuition reimbursements.

Tuition paid for an employee in excess of $5, 250 per year must be included on form W-2 as income.

4. Life Insurance premiums.

Life insurance premiums on group term life insurance over $50, 000 must be included on form W-2

as income.

5. Dependant Care benefits.

Dependant Care benefits paid for or to employees are reported on form W-2 but are not included in

the taxable income.

1099 Information:
The Internal Revenue Service requires that you issue 1099s to individuals and unincorporated businesses to whom you have paid $600 or more for services or rent, $10 or more for interest or dividends, and all fees paid to attorneys whether individual firms, or corporations.

Inventory:
If your business has inventory, a physical inventory must be supplied to your accountant as of December 31, 2006 for calendar year tax payers. You should report this information to your accountant with your company's December tax information.

Closing out Payroll:
The end of the year is the time to instruct your payroll company on the following items:

1. Holiday Bonuses.

Make your expectations clear to your provider. Do you want to stop direct deposit and hand out

physical checks? What is the Federal Withholding amount that you would like to use? Should 401 (k)

be deducted from these bonuses? Etc.

2. Fringe Benefits.

All fringe benefits need to be reported to your payroll provider prior to your company's last payroll

of the year.

3. Vacation and Sick Accruals.

How will your company handle vacation and sick accruals? Should they be paid out at the end of the

year? Or should the balance be carried forward to the next calendar year?

4. Third Party Sick Pay.

This is disability payments made to employees throughout the year. Your company should report

both short term and long term disability to your payroll provider as this information is required to be

included on form W-2.

This list of what to remember is a sampling of the items a company needs to prepare for the end of a calendar year. You should check with your accountant to see what items affect your business so that the end of the year runs smoothly for your company.

Have a happy and safe holiday season.

Meg Eynon started at the Payroll Factory in 1994. With a BA from West Chester University she looked for opportunities to build a life as a business professional. Meg's dedication to customers and quality was rewarded in 2000 when she was promoted to Vice President.

Meg loves her job and the company she helped build. She likes that The Payroll Factory's full service team helps clients grow their businesses by providing advice in the areas of payroll processes, procedures and protocols; eliminating the need for small business owners to divert their attention from running their businesses.

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Many small businesses find out that their bookkeeping staff is, instead, utilized for money earning tasks that take away their ability to complete money saving tasks. They help with marketing pieces instead of invoicing. They complete sales proposals instead of making collection calls.

In many small, privately owned businesses, this is the right thing to do: Make money first, count money second. This does not relieve us from paying our obligations, payroll and vendors - without whom we could not survive.

It is easy and appropriate to outsource payroll, tax payments, bookkeeping and even payables check writing. Talk with your financial services professionals. They usually work with several payroll companies that will ease your bookkeeper's workload. These companies also help outsource your bank reconciliation and/or Accounts Payable check writing - a great improvement to internal controls - without you losing control of your money. Design and build proper systems with proper controls and your bookkeeper and/or controller will be more productive and your company more profitable.

Some business owners have been with the "Big 2" payroll companies and switch every year because the service does not meet their needs. They say "there are no other decent payroll companies." That's like saying, "I've owned Fords and I've owned Chevys, neither fit my needs, but there are no other choices." This is ridiculous.

There are great payroll companies, all over the country, who can provide all of the service and products you need: Online Payroll, Time clocks, Biometric Time clocks, Online Employee Service, Multi-state & Multi Local companies, Certified & Union Payroll, everything. You should demand better service and more response from you payroll provider.

As with everything in a company, the owner must dictate the direction and force of any idea or change. Set the tone of your company to improve productivity in this area. Set the tone to improve efficiency and internal controls. Demand that your staff follow the rules. Most importantly, you must follow the rules. If expense reports are due a certain day, get it done. If notification must be given to get a check, give notification; don't just tear a check from the checkbook. If you break the rules, everyone breaks the rules.

These are simple and inexpensive changes to make. You don't have to implement everything at one time. Start now and make one change every two months. In twelve months time you're likely to have more money, time and a happier bookkeeper and controller.

Allen Noll is in the business of building systems to help companies tackle the challenges faced by modern enterprise. Allen's entrepreneurial spirit comes from his father and from an assortment of interesting jobs he's held from a young age. He's cut grass and shoveled snow, he worked at a car wash and in restaurants, he sold audio equipment and computers and he's even worked on a dairy farm milking cows. However, since his graduation from Villanova University in 1989, he's been working in the third-party payroll processing industry.

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Small business owners have many responsibilities and a lot of work to do in order to keep their businesses up and running. Payroll is the last thing most employers want to worry about.

The good news is that there are many companies out there which will take over payroll responsibilities to ensure that your employees are paid correctly and consistently on time.

There are in fact many more benefits that come with using a payroll service including:
1. IRS penalties can be avoided. Employers may be charged thousands of dollars in fines for late or incorrect filings.

2. You can avoid the hassle and stress of managing your salary payments. because everything is taken care of by the service company.

3. Time is freed up. The time spent managing accounts can be freed up for leisure or for more efficient profit making.

4. Overall cost of salary management may actually be reduced. The processing of accounts can be rather costly when you include labor costs, annual purchase of a payroll software subscription, stationery costs, training costs, and potential IRS fees. Collectively, these costs justify the use of outsourcing this service.

5. Direct deposit may be made available. This is a benefit to both the worker and the employer. The employee won't have to make a trip to the bank and the employer can avoid time-consuming and error-prone paper handling.

6. Salary management services are up-to-date with legislation. It is their job to always stay on top of the ever changing salary legislation and regulations. Small business owners don't need to worry whether their software is up-to-date and can avoid heavy fines from using the wrong tax tables.

7. Training in accounting is unnecessary. This will save businesses money and stress with the employee turnover.

8. The consistency of professional services gain trust for the employer. By outsourcing payroll, businesses can be assured that their workers are paid on time every time.

9. All payroll information is archived for easy access. Payroll services file all documents for a statutory time.

10. Other services are often offered, including handling HR issues and tax queries.

Who should use a payroll service?
Payroll outsourcing is especially suited for small business owners, but any employer who finds employee salaries a burden to manage or who wants the benefits outlined above can enlist the help of such a service. There are some situations where businesses would especially benefit from outsourcing, including:

* Those employers who have enough people to make accounting problematic, but not enough to justify an in-house department dedicated to that task.

* Those who have employees from multiple states (filing gets complicated) where different rules apply.

* Employers that have a habit of neglecting accounting responsibilities and a history of IRS filing fines.

Payroll mistakes can be costly. They can cost employers the trust of their employees, thousands of dollars in fines, and hours of valuable time in correcting problems. Small business owners can avoid these problems and actually save time and money by outsourcing their salary management.

Article Source: http://EzineArticles.com/?expert=Andrew_Stratton