Now that your busy year-end accounting and filing season is over, you may want to take time to think about how to make this process easier for next year! Processing W-2 forms is a dreaded task for many payroll administrators:
• Making a mistake on an employee’s W-2 not only puts the business at risk for costly fines and penalties, but also creates a great deal of extra work to fix.
• In addition to the compliance issues, there is also the matter of the effort and costs required to print W-2 forms and mail them to employees.
Complete W-2 e-filing services can eliminate most of the pain associated with processing W-2s in-house. In the past, these services were provided by payroll service providers and were often expensive. The addition of complete e-filing services to many payroll software solutions has made this option very affordable and offers significant efficiencies for small and midsized businesses.
Minimum requirements for an effective e-filing solution
When determining whether a complete W-2 e-filing solution is the right choice for your business, there are several features to look for:
1. The solution should be native to your payroll solution and automatically convey your payroll data directly from your payroll entries. Manual entry of your payroll data opens the door to transcription errors and lost time trying to locate and fix errors.
2. The solution should include automated error checking that complies with, at a minimum, the standards set by Accuwage and eVerify.
3. It should provide the ability to save a history file of each filing and print file copies, if desired.
4. It should include all filings required: federal and state copies including the federal W-3 and any state reconciliation forms.
5. It should automatically print and mail employee copies directly to your employees.
6. It should also host employee copies to a password-protected website so terminated employees who have address changes can access a copy of their W-2s and print them.
Additional features can provide even more efficiency
Outside of the minimum requirements listed above, there are several other features that provide benefits and efficiencies:
1. Your new e-filing solution should provide the ability to schedule when your employee copies are mailed, when your federal filings are made, and when your state copies are filed. It should also provide the ability to make corrections at no charge up until the filings are made. Oftentimes, when employees receive their W-2s, they recognize changes that need to be made. The ability to file a corrected federal and state filing prior to their submission date will prevent employees from needing W-2 Cs or other additional forms.
2. It should allow you to review all employee data in a spreadsheet format, which allows for easy editing and the simple entry of additional information required, such as third-party healthcare.
3. It should include forms for all states that require W-2s and all U.S. territories.
4. You should be able to find testimonial evidence from customers who have used the solution with your native payroll solution.
5. The solution should have at least three years of service history to ensure that the solution is mature and well-tested.
Make sure the cost of the service is a good return on your investment
Finally, the e-filing solution must be affordable. Typically, the cost of processing W-2s in-house is between $3.85 and $4.35 per employee. This cost includes processing time, forms, envelopes, and postage. A fair price for a complete service solution should be below than the lower limit of in-house costs.