International Payroll Year End Precautions and Checklist

International Payroll Year End Precautions and Checklist

The end of the year is around the corner, making it a busy time for a business’ payroll department as they work on closing the books. Year-end tasks quickly pile up on top of the normal day-to-day to-do list, and it can be easy to lose track of all the tasks. This is doubly true for businesses whose financial transactions cross international boundaries, with employees in multiple countries around the globe. To help you stay on the right path this year, we’ve pulled together a list of priorities that must be achieved at payroll year end.

Payroll Year End Checklist

As your business finalizes the budget for the upcoming year and prepares to activate next year’s business initiatives, you’ll need to first take care of the financial requirements left for the remainder of the year. When managing payroll year end, your team should divide your tasks into two categories: those looking back on the previous year and those looking forward to the next one.

Looking Back

The end of the year is the time to check on all of your payroll and employee data to ensure accuracy. You’re going to be sending out tax forms and payments, so you’ll want to check for proper data recording and formatting. Areas to monitor include:

• Proper formatting for tax forms, such as W2 in the United States
• Ensure year end tax payments are correct and have been sent to the proper authority
• Calculate tax payments to ensure accuracy
• Prepare and send income statements to your employees
• Calculate any fringe benefits that employees receive that might be taxable, such as personal use of a company vehicle, non-qualified moving expenses, and employer-paid education not related to the job
• Double-check that the proper bonuses have been paid out or calculate year end bonuses and pay them
• Check on any non-taxable allowances, employee contributions to retirement funds, or any other special kinds of income. This can be especially important in countries with complex allowances and deductions, like India.

In addition to checking on the past year’s data, the close proximity to the year end makes proper dating important for the last payroll period. If you’re working with a consolidated payroll provider, be sure to work with them to submit the final paychecks in a timely manner before the year comes to a close. If checks are dated after the new year, for example, those financials will fall under the next year’s income, throwing off your numbers.

Looking Forward

The end of the year is also a great time to plan for what’s to come. One way to mitigate errors in the upcoming year is to ask employees to verify personal data, such as address and contact information. Kicking the year off with accurate data can alleviate payroll headaches, which can have a direct benefit to your team’s productivity.

Other areas to monitor at the beginning of the year include:

• Verify names, tax ID numbers, and other identifying information
• Verify that you have the proper tax withholding information, such as a W4 form in the United States
• Verify any benefits that affect payroll, such as employer matched retirement accounts

You should also prepare your tax reporting and payment information for the next year:

• Check on any regulation or taxation changes for the coming year
• Check on changes for cross-border taxes or expatriate taxation for the coming year
• Order any forms you will need for the next year’s tax reporting
• Lastly, prepare the coming year’s payroll schedule. Check that your planned payroll dates don’t fall on holidays or weekends and if they do, verify the schedule to accommodate those days and inform your employees when they can expect to be paid.

Common Compliance Precautions

Don’t let the stressors of tying up loose ends this time of year let you slip on compliance requirements or best practices for protecting your data. If you follow the above checklists, you’ll likely be sending out and collecting a vast amount of employee data. It’s good practice to have strong employee data protection, especially in your countries that enforce strong data protection laws.

In addition to protecting personal data, payroll requirements change from year-to-year in various countries. For multinational companies that use multiple payroll providers, the door opens up for errors. You can help mitigate risk and confusion among payroll providers by switching to a consolidated payroll provider that can help manage your teams across nations and provide compliance management.


Celergo has represented clients in many countries for many years. We’ve built the local expertise needed to take care of your payroll-related compliance and tax requirements around the world – on time and accurately, especially at payroll year end when your team is managing a number of additional deadlines. To learn more about our services, contact our team today!

 

 

**This article is for informational purposes only. It is not intended to constitute legal advice.

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