2023 Year-End Checklist for Staffing Firms
As the year draws to a close and staffing firms all around the country prepare for what’s next, it’s time to think about what you need to do to be in good shape come the new year!
1. Get Your Finances in Order The first step to closing out the year is getting your books in order. For this, a bookkeeper or an accountant can be a tremendous help. For some smaller firms, the responsibility is all on you and it could be where you spend the bulk of your time at year end! You will want to prepare by making tax adjustments, and making sure all accounting transactions – invoices, billing, pre-paid expenses, depreciation, and fixed assets – are all up-to-date.
2. Decide on Year-End Tax Strategies The last quarter is a good time to evaluate your tax strategies and make any necessary adjustments. Here are some things to keep in mind while looking into it: • Take advantage of tax credits like the Work Opportunity Tax Credit (WOTC) • Thoughtfully plan to defer expenses for the right reasons so that you’re offsetting your income as much as possible when the expenses in question are necessary to the operation of your business. • Note that strategies like paying yourself a bonus, taking a shareholder distribution, paying down credit lines, or paying off other debt will not create deductions that result in tax deferrals.
3. Make Sure You are ACA Compliant While the ACA requirements have changed over the years, it is still incumbent on Applicable Large employers to do their due diligence filing Forms 1094-C and 1095-C. In 2023, you can expect heightened enforcement and a reduction of good faith relief from penalties.
4. Review Your Staff Compensation and Benefits It’s a good time to review benefits and compensation for the next year, as well as stay on top of any issues or corrections that need made by the end of the year. Here are some questions to think about: • Will you give your employees year-end bonuses? It’s important to note that if your staffing business uses the accrual method, you can deduct bonuses for rank-and-file employees declared before year end, provided they are paid within 2.5 months after the end of the year. • Will you provide raises? When budgeting for this, you should take into account not only the raises but also payroll taxes and employee benefits tied to compensation. • Are taxable fringe benefits accounted for? Some benefits are easier to forget than others, especially if you are the one running the HR show. Don’t forget to account for third party sick pay, company car, educational reimbursement, health and life insurance, and transportation subsidies if you have them. • Do you want to offer a retirement plan? For most plans, you have until the end of the year to sign the paperwork. Then you have until the due date of the company’s return (including extensions) to make employer contributions which are deductible for this year. • Will you offer health coverage to full-time employees? Because the ACA is still technically the law of the land, if you have over 50 full-time including full-time equivalent employees you must offer adequate and affordable coverage to full-time employees and their dependents or risk penalties.
5. Audit Your Office It’s a good time to take stock of your equipment needs for your staffing office. Does your staffing firm need new computers or furniture? If so, there are several ways to write-off the cost of purchases, as long as the equipment you replace is ready for use in your business by the end of the year. It’s also equally if not more important to audit your office technology. If you use a VMS, is it working properly? Should you consider other platforms? Also take a look at your website performance, and make sure all your links are working properly. It’s also a good time to back up your data, look at naming conventions, and download any reports.
6. Be Prepared for a Workers Comp Audit You may be about to undergo a workers’ compensation audit before the end of the year. If your workers’ compensation policy is expiring before the end of the year, your insurer will likely initiate the audit process soon after. Preparing for an audit can seem daunting, but there are steps you can take to make the process run smoothly.
Documents and Records Needed:
• Accounting ledger • Tax forms, particularly your quarterly and annual Employers • Federal Tax Return (forms 941 and 944) • Record of cash disbursements • Payments for services from independent contractors • Payments for services provided by subcontractors • Certificate of insurance for each subcontractor • W-2 and 1099 forms • Job descriptions for each worker • Description of your business ops • Payroll records for the term of the policy • Payroll limitations
YEAR-END CHECKLIST FOR STAFFING FIRMS
We hope this checklist helps focus your goals and “to-do” list for the last quarter! Looking for other resources like this? Check out our full list at advancepartners.com/resources.