Closing the Payroll Year

The procedures outlined below should be followed in the order that they are listed. However, if you need to process your first payroll BEFORE you can download and install the year end software release, then please follow these steps:

•Create Time Card Entries and Print Payroll Checks for the New Year (Refer to Step 8)

Be sure to review the remaining steps for reconciling the payroll information for the tax year, printing W2s and 1099s. If you discover that adjustments need to be entered for the tax year (ie. 2023) AFTER you have written checks for the new year (ie. 2024), then be sure to follow the directions in Step 8.

•Example: A check dated 01/05/2024 with a week ending date of 12/30/2023 will NOT be included in the 2023 W-2s.

Please also read the documentation on creating a fringe benefit check to record non-cash compensation for items such as personal use of a company vehicle.

Reconcile the quarterly payroll tax reports to the W-2 Information Report. The wage and tax amounts should be reconciled prior to closing the year to verify that all necessary adjustments have been entered.

•Click on the View W-2s button. W-2 information is displayed on this screen but you cannot print or e-file the W-2 info from this screen. Use the Payroll > Tax Forms / E-File / W2s menu option to generate the W-2s through the Aatrix program.

•Using the W-2 Reconciliation Worksheet, enter down the page the wages and tax amounts reported on the quarterly reports submitted to the IRS and your state. Add the amounts across the page for all four quarters and compare the totals to the W-2 Info Report. If the totals match, then no adjustments are needed.

Note: The W-2 Info Report includes both the gross wage amount and the wages subject to FWH and SWH. A|B uses the FWH and SWH Wage amounts, not the Gross Wage, when reporting wages on the quarterly reports and on the W-2s. If you have no pre-tax deductions, then the Gross Wage amount will match the FWH and SWH wages. If you have pre-tax deductions, then the FWH and SWH wages will be lower than the Gross Wage.

The AccuBuild year end software release contains the tables for the Federal and State withholding taxes for the new year and is typically available for download during the last week of December.

oThe year end release will be installed on the cloud for you between December 26th and December 28th. Please skip to item 5.

oYou MUST be current with your 2024 update fees in order to install the year end update.

oAll customers that have paid their update fees will receive an email with a link to a web page that contains the download option.

Install the update AFTER the last payroll check for the tax year has been entered and BEFORE closing the month of December. Also, be sure that there are no pending (unposted) batches before installing the release.

a.Download Update - If you have paid your 2024 update fees, you will receive an email with a link to the year end release download site. Save the file to your desktop or to your Downloads folder. Do NOT run the installation directly from the website.

b.Install Update - Once the download is complete, close the web page and make sure all AccuBuild users have exited the program (including yourself). (A backup of your data should be created before installing any update but you should have already created a backup in Step 3 so another backup is not necessary unless new transactions have been entered.)

To install the update, double click on the file that was saved to your desktop. Select the drive letter from the bottom of the screen and then double-click on the program directory where Accubuild was installed. (Example: P:\Accubld9 or F:\Accubld10)

From this point on, click OK, Next, or I Agree to finish the installation; you will not have to choose any other file paths. The update is installed to the original program installation location on the network, therefore it does NOT need to be installed on each workstation.

Once the installation has been completed, open the AccuBuild program. Verify that the new software release number is displayed at the top of the screen.

The payroll cutoff date must reflect January 1 of the new year before payroll checks may be dated in the new year.

•Change the Payroll Cutoff field ONLY to reflect January 1 of the new year. DO NOT change the fiscal year end date or the system cutoff date.

•Once you click OK, the system will alert you that the employee totals must be updated. Click OK to start the process. Since no payroll checks have yet been written for the new year, all of the employee accumulators will be set to zero.

•During this process, the system will also calculate and update the new balance on any Local Deduction Code that has been setup with a Cutoff Limit Type of 'Reducing Balance'.

oAfter the payroll date has been changed to the new year and the totals have been updated, you may print the Payroll report titled 'Deductions Cutoff Limits - Year End Log' (PrSumRpt.648) with a date range of Jan 1 thru Dec 31 of the year you just closed. This report will show you how AB calculated the remaining balance for each local deduction by employee. You may always manually change the cutoff limit in the employee file, if needed.

▪Review the balances of all other deductions that may have cutoff limits and manually adjust the balance if needed.

▪Remember you can have up to 16 local deduction codes on each employee so be sure you click on ALL the local deduction tabs.

▪If an employee has fully satisfied a deduction, you may completely remove the deduction from the screen.

The software update will install the state and federal withholding tax changes automatically. However, you MUST manually enter the following payroll tax rates and wage limits before generating payroll checks for the new calendar year.

•Click Payroll > Properties > Tax Rates. This screen contains the rates and cutoff limits for FICA and FUTA. (Refer to the table below). (Please note: There was an increase in the 2024 Social Security cutoff limit.)

Be sure to verify the following tax rates and limits with your company's accountant before entering them into the system.

Federal Tax Rates	Cutoff Limit	Tax Rate
FICA (Social Security)	$ 168,600	6.20 %
FICA (Medicare)	None	1.45 %
FICA (Additional Medicare) (see below)	$ 200,000	0.90 %
FUTA (Federal Unemployment) (see below)	$ 7,000	0.60 % See Note Below

•Click on the State Tax Settings button to access the rates and cutoff limits for SWH, SDI, SUI and ETT. Select each state code that you work in and make the appropriate changes. Be sure to save your changes. Note: If your state does not use some of these tax fields, then set the limits and rates to zero.

The State Unemployment tax rate and the Employment Training tax rate are supplied to your company by the State. These rates are different for each company and are based on the amount of unemployment taxes paid by your company, along with the amount of unemployment claims charged to your company.

oAdditional Medicare - Tax Rate (Employee) – This field holds the Additional Medicare Tax rate entered as a percentage. Enter 0.9 in this field.

oAdditional Medicare - Exempt Wage Cutoff – This field contains the amount of Medicare Wages that must be reached before the Additional Tax is required. Once the limit reached, the Additional Medicare tax will be withheld from the employee's check. There is no employer match on this tax.

oAdditional Medicare – Tax Rate (Employer) – This field is a READ ONLY field and contains the Additional Medicare Tax rate for the Employer. Currently, the employer is not required to contribute to this tax, therefore, a rate of zero is displayed.

•Federal Unemployment Tax - The FUTA tax rate is 6.0% but generally you can take a 5.4% credit for the amount that you pay into a state unemployment fund. If you are entitled to the maximum 5.4% credit and the state is not determined to be credit reduction state, then the tax rate is 0.6%. Please check with your CPA to verify the FUTA tax rate for your company.

"Generally, you can take a credit against your FUTA tax for amounts you paid into state unemployment funds. The credit may be as much as 5.4% of FUTA taxable wages. If you're entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%. You're entitled to the maximum credit if you paid your state unemployment taxes in full, on time, and on all the same wages as are subject to FUTA tax, and as long as the state isn't determined to be a credit reduction state. See the Instructions for Form 940 to determine the credit." (https://www.irs.gov/pub/irs-pdf/p15.pdf)

oIf you have payroll in only one state, and your state is a credit reduction state, then enter the proper tax rate in the FUTA field.

oIf you have payroll in multiple states, and one or more of the states is a credit reduction state, use 0.6% as the FUTA tax rate. Due to the fact that there is only one FUTA tax rate field, you will need to manually adjust the FUTA tax rate accrual with a general journal entry.

oYou may utilize the FUTA Tax Liability Report to help you determine the tax amount due. This report will compare the accrued FUTA (posted with each pay check) and the calculated FUTA (based on the Federal rate of 0.6%) to calculate an over/under accrued liability amount which may then be adjusted with a general journal entry. Again, if you are in a credit reduction state, refer to the single state/multiple states notations above and consider how this may impact the report.

If you accrue hours for vacation or sick pay, then we recommend printing the Accrued Pay Report as of the 2023 payroll year. The remaining balance of hours on this report should be verified for accuracy before processing payroll for the new year. If needed, you may manually update the Starting Hrs Bal for each employee in the Employees > Pays Tab > Accrued Pays screen.

If you have a Tailored Solution for your misc pay accrual, then be sure to print the associated CUSTOM report (if applicable) and keep a copy of the last pay stubs for comparison.

If your employees do NOT accrue sick or vacation pay hours but have a standard set of hours that they start with every year, then be sure that you update the EFFECTIVE DATE each year in every employee file. This effective date is the FIRST DAY of the first payroll period that is paid in the new year. Example: If your pay period is Sunday through Saturday and your pay date is the following Friday, then the first check date in 2024 would be January 5 and the effective date would be the week beginning date of 12/24/2023.

Once you have completed all items listed above, you may process the first payroll batch for the new calendar year. Before you post the batch, verify that the year-to-date earnings on the checks do not include the prior year's earnings.

If you need to enter adjustments to the closed payroll AFTER you have posted checks in the new year, then you will need to:

•Change the payroll cutoff date BACK to Dec 1st of the closed year and let the system update the employee year-to-date accumulators. This must be done BEFORE you calculate taxes on any payroll entry for the closed year, otherwise, the year-to-date totals will not be correct. Keep in mind that the year end release has probably already been installed at this point, therefore, the FWH and SWH calculations may be slightly different.

•You may also need to change the FICA and other tax rates and limits back to their original settings for the closed year in order for the system to calculate your employer burden correctly. Consider turning on the 'override auto tax calculation' option on the Employees > Fed Tab so that you may adjust the tax amount and subject wage amounts.

•After posting your adjustments to the closed year, you will need to perform the following steps once again to update the payroll year to the new year:

▪Note regarding Step 5: Due to the fact that the prior year had been previously closed, the system will NOT attempt to update the employee local deduction code balances again. But be advised that you should once again double check the deduction balances on each employee for accuracy.

•Review Box 12, Box 13 and Box 14 information. Review the IRS documentation on the reporting requirements for these boxes with your CPA. Please refer to the documentation on entering a fringe benefit check for Box 14 amounts.

Box 12 - Employee Contributions - A variety of information can be reported in Box 12 such as employee pre-tax contributions to a retirement fund or HSA plan. Be sure to review with your CPA the items that should appear in Box 12.

a.Manual - On the Payroll > Employees > Fed screen, manually enter the total amount in field A, B, C or D of Box 12 with the appropriate IRS code.

b.Automatic Update - Instead of entering the amount manually on the employee screen, you may click on the Ded Accum setting on the same screen and then select the appropriate deduction accumulator. If an accumulator is selected, then the system will automatically calculate the amount based on the check records for the tax year. Note: In order to use the feature properly, be sure that the deduction accumulator has been reserved for only one type of deduction. In other words, be sure that two different types of local deduction codes (such as 401k and Child Support) have not been assigned to the same accumulator. Otherwise, the calculated amount for the 401k would be incorrect.

Box 12 - Employer Paid Health Insurance - The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee's Form W-2, Wage and Tax Statement, in Box 12, using Code DD.

•Employee File - On the Payroll > Employees > Fed screen, manually enter the total amount (employee and employer cost of health insurance) in field A, B, C or D of Box 12 with the IRS code DD.

•Aatrix W2 Screen - Instead of entering the amount on the employee screen, you may edit the W-2 information using the Aatrix program (Payroll > Tax Forms / E-File / W2s). The W-2 grid will display the employee information in a grid format including a column for the employer paid health insurance. This may be quicker than editing each individual employee.

AccuBuild uses Aatrix to produce W2s and quarterly payroll tax reporting. This software is accessed through the Payroll > Tax Forms / E-File / W2s menu option.

Please refer to the video that has been provided by Aatrix for e-filing your W-2s:

oAt the top of the main AccuBuild screen, click on Support > Aatrix Partner Page. Scroll down the page to the Aatrix W-2 Demo section on the right-side of the screen.

If you will not be e-filing your W-2s through Aatrix, you will still use the Aatrix system to generate the W2 information. Please refer to the section labeled 'Print W-2s' in this document for detailed instructions.