Sage 50 US Payroll & Year-End Processing

Sage accounting software that helps you to close your financial year once you are sure that no more changes should be made to the end year’s general ledger (Around the 22nd or 23rd period). Normally, there is no reason to close a financial year precisely toward the finish of the last accounting functions time frame. Sage 50 permits you to keep two years of conditional information open and available at any one time. Sage permits you sufficient opportunity to make changes and remedies to the earlier year if essential while simultaneously giving you sufficient support before the following financial year starts in case if you face any kind of difficulties during the closing of your financial year. In this blog, you get complete knowledge about Sage 50 US Payroll & Year-End Processing.

Payroll Year End Checklist

Payroll is one of the most important aspects of any business. But what is a ‘payroll’ all about and why is it important to ensure that you ‘maintain your payroll’ well sorted by the year end? Let’s find out. Essentially, the payroll is the year-end review and verification of the financial information conducted during the fourth quarter of every calendar year through the first quarter of the following year. The payroll year end checklist is important to prepare the employees and business for the tax season, along with this, the year-end payroll also includes:

• The accurate calculation of tax liabilities, deductions and employee compensations that need to be withheld from the employee paychecks. 
• To review the relevant tax documents in order to ensure that all the payments are tracked accurately in the new year. 
• To complete and file the forms with the Internal Revenue Services-IRS, Social Security Administration-SSA, or any state and local tax department.
• Preparation and identification of any changes done to the state, local, and federal employment regulations that can effect your business in the New Year.

Read More-: Sage 50 Payroll Annual Licence

When Does the Payroll Year Ends?

It is important to ensure that you do not miss out on the year-end Payroll dates for the submission of the payroll forms and other tax information. Also bear in mind that the business tax obligations for the year-end payroll can differ from state to state, the business size, and various other factors. However here are some of the most important aspects that the businesses will require to file:

• The Annual Business tax return: the filing deadline depends upon the business structure which is March 15 for multi-member LLCs, partnerships, and S-corporations; April 17 for C-corporations. 
• Forms W-2 and W-3 for each employee by Jan. 31;
• Form 1099-NEC for contractors by Jan. 31;
• Form 940 and fourth quarter FUTA taxes deposited by Jan. 31; and
• Quarterly Form 941 tax return or the annual Form 944 by Jan. 31, depending on when you file

Also bear in mind that the precise preparation of the year-end payroll of the taxes starts much ahead of the end of the year. Hence, it is recommended to maintain an accurate and up-dated payroll records throughout the year inorder to ensure that you can make it to the deadline, and ensure that the tasks are as well-sorted as possible

Before Ending the Processing, Make Sure you know How to Close the Payroll Year

Sage prescribes that you hold on to close the main finance year until all finance reports, W-2 information, and 1099 information are settled. In case if there are any errors or mistakes in worker profit or W-2 information, you have an option to address them. You ought to likewise hold back to close the principal finance year after you have finished your assessment forms for the year in which you are closing.

Before Closing the Fiscal/Payroll Year

Sage accounting software recommended that you stand by to close the principal financial year until after you have sent your assessment forms for the earlier year. You can work for your company in the Sage 50 second open financial year. The main monetary year holds the earlier year’s transaction detail and permits you to make changes, if fundamental. Before you close the financial year, in case if you are utilizing bunch posting mode, you have to post and print all diaries and the Yearly General Ledger report. Additionally, you have to print every open receipt, merchant and finance checks, and back up the entirety of your information.

In the accounting time of a financial year, you have to make changing sections. After making all changes, you are prepared to start the ending processing of the financial year.

Go ahead with Payroll Year-End Checklist:

If your company records payroll transactions in Sage 50, payroll year-end procedures consist of the following then perform the below guidelines:

• Make sure that you Install the most upgraded Sage 50 of tax service update and choose the accurate Sage Business Care plan
• Now, you have to check and verify that your state unemployment wage limit and must be sure that percentage rates are accurate
• After that, you have to Print the reports or forms required for adjusting, auditing, or year-end closing goals
• Then, you have to create a complete backup company data file
• After that, you need to close the current payroll tax year. This step is optional

After-the-Fact Payroll features and Payment Information approach. You need to follow this method that may be needed if you are required to enter the after-the-fact information before you proceed to print the payroll forms and then close the payroll tax year with these little steps:

• User need to enter the after-the-fact payment information to print vendor 1099 forms
• Also, enter the after-the-fact payroll information to print employee W-2 forms

After Closing the Payroll Year

Make sure you should update the business’ state joblessness charge table and change new limits points and percentage rates.

• Update the business state joblessness charge equation to another finance charge year
• Find out about the Sage 50 Year-End wizard
• Perform other finance assignments
• Peruse the year-end outline and you are done with this process

The Payroll Year-End: What to Do?

Be sure to submit the final reports to HMRC for the 2022/23 tax year by April 19th, 2023. The next important aspect to remember is that you need to prepare for the new tax year and ensure that you provide the employees with their P60 by at least 31 May 2023.

So, to start-off, it is essential that you maintain a diary or a checklist where you can enlist the key dates and tick them off as and when they have been accomplished. Now, let’s get started with the checklist:

The Payroll Year End Checklist

Step 1: To check when the Payroll Ends

There are certain situations and circumstances when the payroll will not end on week 52. Hence you might need to complete an additional payroll, as your payroll might end by week 53 or 54 and 56. This can occur in case two aspects are occurring:

• The Payrolls processed by you are weekly, two-weekly or four weekly. In this case the monthly payrolls are excluded. 
• The normal payroll date is somewhere near 5th April every year. In case of the leap year this can be 4th of April.

Here, you need to take note of the fact that the payrolls that run on a monthly basis always have 12 months. This essentially translates to the fact that it is never 13 months and this section can be skipped and run the payroll as usual. In case the payroll runs after 5th April than you can go ahead with the rest of the steps.

Now, in the case of the payroll falling on 5th April, then the payroll can end in the following manner depending upon how you pay either weekly, two-weekly, or four-weekly.

• Weekly payroll falling on 5 April: A week 53 payroll (5 April to 11 April)
• Two-weekly payroll falling on 5 April: A week 54 payroll (5 April to 18 April)
• Four-weekly payroll falling on 5 April: A week 56 payroll (5 April to 2 May)

In case you are affected by this, then it is recommended to switch the employees to a week one tax code for the extra payroll. Most times this will be done by payroll software easily and automatically, but you still will have to give it a through check. In case, the tax code status does not gets amended into the week one basis, this will imply that most employees will pay too much tax. Once the new payroll has started, you need to adjust the tax code once again for the new tax year accordingly to the P9X.

Step 2: Take a Check at Leavers and New Starters

There are cases when the employees might have left your organization during the past year, or there are some new starters. So, this is the time, to check if these leavers and starters have been processed or not. This can require you to have a word with the managers and ensuring that the lines of communications are open.

According to Julie Northover, a payroll consultant and trainer, says “Year end is a final sweep to ensure nobody has been missed,” she further adds “It’s a time to make absolutely sure you’ve covered everything”.

Julie further states: “Most people are very disciplined and if they take care of things like this at the end of each pay period then everything should be in order.”

To this it is important you accomplish this before you submit the final FPS- Full Payment Submissions or the EPS-Employer Payment Summary.

According to Julie: “Once you move into the new payroll year, it’s not always easy to go back and fix details like this,” she adds.

Step 3: The Final Pay Run Processing

Keep in mind that you complete the final run of the pay of the 2022/23 tax year before you finally run your year end. Hence, now you have worked-out if you have week 53, 54 or 56 and have processed the final payroll of the tax year and have also made any employers leavers as required. At this point you can send the final FPS and if necessary also the EPS, the deadline for which is 19th April, additionally you are also required to the P32 payment over to HMRC.

Keep in mind that there is not much differnce between EPS and FPS in the final pay period. Now, submit these as normal, then you can proceed along with the payroll year end process. ALso, avoid errors that might need retrospective adjustments is key. In this case the adjustments are required after April 19th, that will also include the additional EPS and FPS. 

The retrospective adjustments need to be done before 2020/21 via an Earlier Year Update (EYU) but this is no longer used.

“There is a process for communicating with HMRC about anything that’s not correct,” says Julie. “But it’s an admin burden that payrollers like to avoid where possible.

“It’s an unwritten rule among the payroll profession that we will do everything we can to avoid the necessity for retrospective adjustments after the tax year end is complete.” she further adds.

Step 4: Processing the Year End

You can use your payroll software at the end of the tax year and select the tax year you wish to complete on the Year End screen and make the final EPS submission to the HMRC. But bear in mind that this final submission is different as compared to the other normal submission you send over to HMRC either on the quarterly or monthly basis. The FInal EPS submissions also comprise of the year end declarations and if applicable it can feature the date your organization ceased trading.

Now, it is possible to process your year end and make the final submission for the 2022/23 tax year. Once this is accomplished you can produce the P60s.

Step 5: Getting the P60 s Ready

It is important that all the employees who are working on the final day of the tax year on 5th April require to receive P60 from you by May 31st.

This also comprises of the deemed employees that are now on the payroll because of the Intermediaries Legislation or (IR35). This is an important piece of document that comprises of the summary of the pays and deductions for the year and is one of the final tasks to be completed following the year end.

With the use of the payroll software one can easily generate the P60s and share them in a secured manner with your employees. This is quite similar to the way you share the payslips. One can easily print them off as as well. 

While you might be tempted to run the P60 creation the soonest, however, it cannot be done, before the issuing of the final payslip. Also, the usual time required for the feedback from the employees for any errors is also necessary. 

“You send payslips out 12 months of the year, if you’re running a monthly payroll,” adds Julie.

“And then once a year you send another document, the P60, which is just summarising those 12 payslips.

“So, if you’ve not had and pay or reconciliation issues with the 12 payslips, you shouldn’t have an issue with the P60.”

Step 6: Start the New Payroll Year and Check the P9X

“There are two processes that payroll professionals often see as one,” says Julie. (payroll consultant and trainer)“They are closing one tax year off and opening up the next.

“The new year checklist is bigger than the year end checklist nowadays.

“So, as soon as you close off and before you start your month one (or week one) payroll, you need to refer to the P9X.”

But what is the ‘P9X’? Well,this is a document that has been published by the HMRC. It explains the tax codes that the employers need to change or carry ahead on APril 6th. The same information is also summarized by the various software vendors documentation, so that it could be another port call prior to the first pay run of the year. Nevertheless, one needs to consider the government web pages as the main source of any information. The other aspect for the new payroll year also requires checking the threshold like student loans and postgraduation loans. 

“These will probably be hard coded into the yearly updates from your software vendor,” says Julie.

“But you should not sit on your laurels and assume everything’s correct. You need to check to ensure everything is accurate.”

Let us take a look at some of the manual things that you need to take care of when compiling the Payroll year-end checklist:

• The CA2700 certificates are only valid for one tax year if some person has deferred National Insurance. Hence, you need to renew the certificates necessary before the processing of the pay for the new tax year with the use of the deferred National Insurance contributions (NICs) insurance category letter.
• The individual who is entitled to the childcare vouchers will need to be reviewed to make sure that they do not require any amendment for the value that they are eligible for. According to the PAYE process, it is required by the HMRC to complete a Basic Earning Assessment or BEA before every first pay period in the new tax year for any individual who has been the recipient of the child care vouchers since 6th April 2011.

The Year And Dates to Be Aware of: Payroll Year

Some of the more important key dates around the payroll year-end have been highlighted along with the other payroll dates that you need to know of: 

5 April: The Tax year ends on 2022/23.

Before 6 April

• Update the employee payroll records.
• Be sure to update your payroll software.

6 April: The start of the new tax year (2023/24). 

19 April:  the deadline for the final submission of the 2022/23 tax year.

22 April: The deadline for month 12 PAYE.

By 31 May: The employees need to receive their P60s by this date.

By 6 July: One needs to report on expenses and benefits. One also needs to use your payroll software to do this.

6 July: This is the deadline to submit the P11D and P11D(b) forms.22 July: this is the date, when the payment of class 1A National Insurance contributions on Benefits in Kind must be with HMRC (note that 19 July is the deadline if not using digital systems).

Also Read-: Sage Payroll Services

Conclusion

So, there you have it people, these are some of the facts, dates, deadlines and more about the Sage 50 US Payroll & Year-End Processing. However, if you still encounter some problems with the same, be sure to reach out to our team of experts.

Frequently Asked Questions