Year End 2020

As the year ends, you need to complete certain tasks in order for the closing of your books to go smoothly and prepare for the upcoming year.  To help make the transition easier, I’ve listed some important year-end tasks to guide you through as well as various new rates for the new year.

Payroll

  • If you are a 2% shareholder and the company paid your health insurance,  the amount paid will need to be converted to wages before the end of the year and reported on your W2 .  Ask your payroll professional for help.
  • Make sure you have your employees correct address and social security number.
  • If you have any employees to filed exempt, they will need to file a new form W4.
  • You should have by now received a notice from the EDD with your new SDI rate for 2021.  Be sure to get that notice over to your payroll professional so the proper amount of tax is withheld starting in January. If you handle your own payroll be sure to update the rate in your system before running payroll for the first time in 2021.

Updated Payroll Tax Rates and Limits

     TAX                                              RATE                                   LIMIT
Social Security                              6.2%                               142,800
Medicare                                       1.45%                              No limit
Medicare wages  >200 K             0.09%                              No limit
SDI                                                  1.2%                               128,298

New California Minimum Wages Effective January 1, 2021

25 and fewer employees   $13.00
26 or more employees      $14.00

The federal mileage rates for 2021 have yet to be released for 2021.

1099’s

Non employee compensation will no longer be reported on form 1099 Misc,  Starting with 2020’s reporting you are to use form 1099 NEC.

Make sure you have the correct address and tax payer identification number for your independent contractors. If you find you still need to obtain some of the information,  you can find form W9 on the resource page of my website along with a sample information request letter.  https://beneficial-bookkeeping.com/resources/