Nobody actually prepares W-2s in January. What happens in January is printing the result of twelve months of payroll decisions. Every fringe benefit that got coded wrong, every reimbursement that should have been taxable, every owner health insurance amount nobody added, they all show up on the form or they don't.
We work the other direction. Payroll gets reconciled every month against the general ledger and against what was deposited, so by December the W-2 totals already agree with the quarterly filings that were sent all year. Your employees get their forms in January, copies go to the Social Security Administration and the state, and your outside CPA firm gets a package that matches everything else. Boring is the goal here.
The mechanics are straightforward when the inputs are right. Wages, withholding, Social Security and Medicare, retirement deferrals, dependent care, health coverage reporting, and the state and local boxes underneath. We build the file from the payroll register, tie the totals back to the four quarterly returns already filed, distribute forms to employees on the schedule they expect, and transmit copies to the agencies. Employees who have moved get chased for a current address before the forms go out, which cuts down on the reissue requests that show up in February.
A short list causes most of the problems. Personal use of a company vehicle. Group term life over the excludable amount. Health insurance premiums paid for owners in an S corporation, which have to run through payroll to be deductible correctly. Bonuses paid outside the payroll system by check because it was faster that day. Gift cards, which are taxable no matter how small. Each one has to hit a paycheck before the final run of the year, and after that the fix is a corrected form and an awkward conversation. We ask about these in November, when they're still easy to handle.
It happens, and how it gets handled matters more than whether it was your fault. Someone compares the W-2 to their last pay stub, the numbers don't match, and they assume something was taken. Usually it's a pre-tax deduction doing exactly what it's supposed to do, and the explanation takes two minutes if someone can pull the detail. Occasionally the employee is right, and then a corrected form gets prepared and filed rather than argued about. We handle both cases directly so your office manager isn't stuck defending a number they didn't calculate.
The firm that prepares your income tax return is not going to reconcile your payroll for you. They'll take what you hand them, and if it doesn't tie, they'll ask questions, and the questions cost you time. We send them a year-end package with W-2 totals agreeing to the quarterly returns, the general ledger wage accounts agreeing to both, and owner compensation broken out the way they need to see it. Baum's Accounting Services doesn't prepare income tax returns and Justin isn't a CPA. The handoff is the point. Book a consultation before December if this year's payroll has loose ends.
Yes. A corrected form gets prepared, filed with the Social Security Administration, and given to the employee, and the state copy gets amended too if the error touched state wages. The sooner it's done the less disruption it causes, especially if the employee has already filed. Bring the original and the payroll detail behind it.
No, and that line doesn't move. Baum's Accounting Services prepares and files payroll forms, including W-2s, but not income tax returns for you or the business. Justin isn't a CPA or an enrolled agent. Personal and business returns go to an outside CPA firm, and We will hand your numbers over in a form they can use.
It can. Two systems means two sets of year-to-date totals, and wage bases for Social Security and unemployment don't always carry over correctly. The result is either duplicate W-2s or wrong totals on one form. We reconcile both systems before year-end so the employee gets one accurate form instead of two confusing ones.
Other work in this area that tends to come up in the same conversation.
Contractor payments reviewed, W-9s chased down before January, and forms issued to the right vendors under the right box.
Read moreHours, salaries, deductions, and reimbursements processed each pay period, then posted to the ledger so wage expense is right the first time.
Read moreFederal and state withholding deposited on your required schedule, with quarterly and annual returns prepared and submitted when they're due.
Read moreBook a consultation and we will show you what the first ninety days would look like.
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