It’s that time of year again — your fiscal or financial year-end. While others are dusting off the confetti and proclaiming shiny new resolutions, if you’re a restaurant owner or manager, January means year-end processes like preparing W-2s and getting ready to file and pay your business taxes. There’s also much less food and frivolity in the countdown to these deadlines.
Here are just a few of the items on your to-do list and what you can do to help start the end-of-year processes off right, this year and every year going forward: (You never know, you may even wind up having enough time left over for your own little celebration.)
1. Verify Your Business Tax Identification Details
When you register your business with the Internal Revenue Service (IRS), you receive a 9-digit identification number called an Employer Identification Number (EIN)/Federal Employer Identification Number (FEIN).
When filing documents or making payments to the IRS, Social Security Administration (SSA) or similar organizations, you will need to provide your EIN/FEIN as well as your company name and address as provided at the time of registration. In other words the details have to match. Any confusion can result in processing delays.
You will also need your business identification numbers for state and local tax authorities.
A best practice is to keep copies of these records all in one place so that you can always find them when you need them.
2. Confirm Your Employee Details and Prepare W-2s and 1099s
This year employers must file both theirs and their employees’ W-2s with the Social Security Administration by January 31. To make this process a little easier on yourself:
Ensure that you verify each employee’s social security number, name and address when they fill out a W-4 during the hiring process.
Follow up when employees get married, divorced or have children as this can affect the withholding rates. There can also be name and address changes.
Set a date on in the fall, preferably September, to ask employees to verify and/or update their information. (Some employees may come to you in March or April when tax season rolls around and they realize they should have made a change.)
Recognize that some states follow the same timeline as the IRS, while others step to the beat of their own drum. Be sure to check the appropriate state websites for deadlines and withholding rates.
3. Report Your Restaurant’s Tipped Income to the IRS
If tipping is a customary practice in your restaurant and you regularly have more than 10 employees working at your establishment on a typical business day, you will likely need to complete Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips (PDF)
If you’re submitting a paper form or multiple 8027s, they’re due February 28. If you’re filing electronically, the deadline is March 31, 2017.
The best way to prepare for your annual reporting is to keep track of your tipped income as a regular part of your accounting and bookkeeping practices throughout the year.
You will also be responsible for entering tipped income amounts for your employees on the W-2s.
4. Gather The Reports You Need
In terms of payroll year-end, you’ll need to confirm that your quarter-to-date (QTD) and year-to-date (YTD) amounts are accurate, as these are the figures you’ll use in completing and filing your employee and employer documents, like W-2s. If you’re using payroll software, this will be pretty straightforward. If you’ve been keeping track manually, you may want to grab a cup of coffee… it could take awhile.
Your accountant will need your key financial statements, including your balance sheet and your income and cash flow statements. (This is where accounting software comes in very handy.) You will also need to provide your federal, state and local business identification numbers and grant your accountant or tax specialist permission to act your behalf.
5. Make Preparing for Year-End a Year-Round Process
In your best mama-always-says voice, tell yourself, “An ounce of prevention is worth a pound of cure.” Once you’re done cringing, take a deep breath and realize that it’s just smart business sense to put the proper tools and processes in place throughout the year. This includes:
· Working with a bookkeeper and accounting, preferably individuals with experience in the specific requirements of restaurant payroll and accounting so that you can set up processes like:
- Tracking expenses according to the deduction type throughout the year.
- Preventing you from making common mistakes like mingling business and personal accounting.
- Keeping your books up to date on a regular basis.
- Using the right overtime, withholding and similar tables, which are also usually updated this time of year.
- Meeting deadlines for payroll taxes and other reporting/filing requirements.
· Automate functions like:
Receipt and document storage with Hubdoc
Inventory with BlueCart
Payroll with Wagepoint
Note: Many of these tools also integrate with each other creating a seamless, end-to-end process for your back office. They will also work on mobile devices like smartphones and tablets, so you can check in without having to be in front of a desk.
About the author: Content guru and marketing co-conspirator at Wagepoint, Michelle is a professional writer with agency and corporate experience who is now diving into payroll with full scuba gear in tow. When away from the keyboard she spends time hiding chocolate from her children and attempting to escape for a morning run (to work off the chocolate).