2007 year-end: Battle or victory?

October 22, 2007

Pipeline - Vinny MottolaBy Vinny Mottola, senior vice president of Ceridian Small Business Services
One of my favorite books is the Art of War -- authored by Chinese general, military theorist and philosopher Sun Tzu. It's the oldest book written about military strategy. While it is not necessarily the most entertaining book ever written, it provides great insight on how to conduct business, peacefully resolve conflict and successfully maneuver your way through life. Sun Tzu taught me that strategy was not planning in the sense of working through a to-do list. Instead, it requires quickly responding appropriately to changing conditions. We all know that change is something that we can count on, and it's how we approach change that makes all the difference. And speaking of change, there's a big one looming right around the corner: year-end payroll requirements and all that they entail.

The "safe harbor" guidelines
One of the biggest reasons to meet your year-end requirements is to make sure that your employees' W-2s are correct and issued on time. The legal ramifications of not doing so can be costly. Many of us have heard about, for example, the recent regulations proposed by the Department of Homeland Security (DHS) requiring employers to take certain steps if they receive a "mismatch" letter from the Social Security Administration (SSA) or the DHS.

Why is this happening? Each year the SSA sends about 150,000 mismatch letters to employers with 10 or more employees. These mismatches are detected after employers report their workers' W-2 data to the SSA and the reported Social Security number and name combination doesn't match. Under the proposed laws and regulations, if a business receives a mismatch letter and chooses to take no action, it can be held liable for "knowingly employing" an individual who is not authorized to work in the United States. Although the rule was recently challenged in federal court and suspended for the time being, businesses need to take notice of the potential consequences if the DHS rule or a similar one is passed. Unfortunately, businesses could be subject to fines and prosecution if the business is audited by the DHS. Not only that, the DHS has recently notified employers that it intends to crack down on work authorization violations. Under the proposed regulations, receiving a mismatch letter would imply that an employer has "constructive knowledge" of having an unauthorized worker on payroll. Therefore, employers who receive a mismatch letter would need to comply with the regulations to qualify for safe harbor from prosecution.

Armed and ready
Besides the legal aspects of year-end, for most companies, it is the busiest time of the year with a lot of extra work, processes and forms to complete, intermingled with holiday parties, vacations and a host of other activities. Put it all together and it's a formula for stress if you are in payroll. But it doesn't have to be that way. By preparing in advance, you can make year-end payroll processes less stressful for everyone. And, of course, Ceridian doesn't want to charge our clients any extra fees, which is why we try to prepare you as much as possible by providing a variety of tools and reminders.

Year-end demands may feel like all out war at times, but you can win each battle by deploying the right tactics. Here are a few other resources that are available to you from Ceridian to help ensure that year-end is a win-win for everyone:

  • Social Security reminder - prints with the payroll and asks clients to review their employee's Social Security numbers for accuracy to ensure the W-2 is correct, and outlines the penalty for incorrect W-2s.
  • Supplies notice - encourages clients to order their payroll binders and dividers for the New Year (a discount is offered for early orders).
  • Bonus worksheet - helps your organization process bonus checks, plan distribution of the checks to employees and anticipate the ramifications to your organization's payroll budget costs.
  • Disability notice - reminds clients to report any disabilities and helps prevent W-2 reruns.
  • Accountant hotline - gives your accountant year-round access to an experienced senior analyst who will assist with all of your year-end needs. Your accountant can call our main toll-free number and select option four to be directed to an analyst.

Now, let's go back to that book, the Art of War. More than war, the book is all about victory -- how to get what you want without conflict. The best battle, Sun Tzu says, is the battle that is won without being fought. How will your 2007 year-end stack up? Will it be a battle or a victory? With Ceridian here to help, you can claim your victory and make your year-end the best it can be. And that's not just lip service. The proof is in our Small Business division's 95 percent satisfaction rating in "customer service willingness to recommend." That's because we think it's pretty important to help our clients help themselves. So this year, rally your troops around the mission of preparing ahead. When you do, your organization will have the full armor to march confidently into 2008 with a victorious year-end.

Vinny Mottola is senior vice president of Ceridian Small Business Services. He has more than 25 years of experience in leading small business strategies in the financial services industry. With Ceridian, Mottola leads sales and operations for Ceridian's HR/payroll, tax filing, benefits administration and other employer services offerings to the national small business market.


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