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6 Uses for Year-to-Date Payroll for Clients

Maria Tanski-Phillips
Posted by Maria Tanski-Phillips on Oct 18, 2021 12:26:32 PM

If you offer payroll services to clients, you know a big chunk of your clients’ expenses go to paying employees. To see how much your client spent on payroll during the year, you and your client can look at year-to-date payroll information. But, year-to-date payroll doesn’t just tell you how much your client paid employees. It can also show you and your clients if they’re on track with their budgets, help them make financial projections, and more.

Year-to-date payroll uses

Year-to-date (YTD) payroll can tell you and your clients a lot of information about their businesses. And if you use payroll software, it can be easy to gather a year-to-date payroll or payroll details report and put it to good use.

Your client’s year-to-date payroll report should be able to break down payroll totals by:

  • Dates
  • Employee
  • Location (if your client has more than one)

Clients can use their YTD payroll information to see things like their employees’ gross income or how much money was spent on payroll for the year or period. But, you and your clients can also use year-to-date information for so much more. Here are six uses for year-to-date payroll.

1. Budgeting

Part of your role as an advisor is guiding clients through their finances and helping them budget properly. And you probably guessed it: YTD payroll can be a big help when it comes to budgeting.

Using year-to-date payroll information can help your clients compare payroll expenses to the annual budget and determine the percentage of total payroll costs. By reviewing the two side by side, you can help your clients make financial decisions, like hiring and budget cuts.

If your client’s payroll costs overtake their budget, they should probably avoid hiring, if possible, and cut back on costs. However, if a client’s payroll cost percentage isn’t too high, they may be able to expand their team and work other expenses into their budget.

Talk with your clients about payroll costs and compare them to their annual budget. Then, determine what moves they can make budgeting and payroll-wise moving forward.

2. Filling out Forms W-2

As an advisor, you know filling out Form W-2 can be a time-consuming process for clients. But, it’s a necessary step at year-end. One way to make the W-2 process easier and ensure it’s accurate for your clients? That’s right—using year-to-date payroll.

Here is some information year-to-date payroll can help your clients gather for Forms W-2:

  • Wages, tips, and other compensation
  • Federal income, Social Security, and Medicare tax withheld
  • Social security wages
  • Medicare wages and tips
  • Social security tips
  • State and local wages, tips, etc.
  • State and local income tax
  • Box 12 information
  • Allocated tips

If you or your client do payroll by hand, year-to-date payroll can be a lifesaver when it comes to filling out Form W-2 for each employee.

If you use payroll software to process your clients’ payroll, you may be able to skip this step if your platform prefills W-2s for you. But, it never hurts to let clients know what information they can pull from their year-to-date payroll report to fill in Forms W-2.

3. Projecting

Although you’re not a psychic and can’t predict everything for your clients, year-to-date payroll can be used to see if your client is on track to meet projected results.

Using year-to-date payroll information throughout the year can help you and your client see if they are making smart financial decisions and sticking with their budget. For example, your client could use YTD info to see if they’re on course to meet their projected results for the year.

Guide your clients through navigating the YTD payroll report and how they can break it down totals to see if they line up with projections. Go over their report with them to see if it aligns with their projections, too. If it doesn’t, it’s likely time to make a few adjustments.

4. Making decisions

Along with making budgeting decisions, you can use year-to-date payroll to help your clients make other decisions, too.

So, what kind of decisions are we talking about here? Your clients can use YTD payroll to make decisions about finances, hiring, short- and long-term goals, employee raises and bonuses, and the company’s future.

Let your client know how they can use YTD payroll and other reports to make informed business decisions.

5. Determining tax liability

Because year-to-date payroll shows payroll tax information, the report makes it a snap for clients to gather information about tax liabilities at year-end and throughout the year (e.g., during the quarter).

It’s crucial for your clients to know their tax liabilities so they can manage purchases and cash flow. Use year-to-date payroll to help clients predict their quarterly and yearly tax liabilities. Based on predictions, clients can hold off on making big purchases to ensure they have enough income to cover their taxes.

Help your clients use their YTD payroll to predict tax liabilities. Or, use it to predict your clients’ tax liabilities if you file and remit taxes on their behalf.

6. Completing workers’ compensation audits

Most of your payroll clients need to have workers’ compensation insurance in case an employee suffers from a work-related illness or injury. And sometimes, your clients may need to have a workers’ compensation audit that looks over aspects of their payroll to ensure they’re paying the right amount for coverage.

If your client gets audited, they will generally need to pull certain payroll reports and information, like year-to-date payroll. That way, they can verify payroll amounts, employee compensation, etc. with the auditor.

If one of your payroll clients is audited, let them know which reports they need to pull and the payroll information they need for their audit.

Payroll reports and year-to-date information

Again, you can use payroll reports to pull information about your clients’ year-to-date payroll information. And, the last thing you want to do as an advisor is skimp out on reports for your clients.

If you’re thinking about switching payroll providers or need a program with better report options, make sure to be on the lookout for software that has accurate, easy-to-read, and shareable reports that have a variety of filtering options (e.g., by employee, totals, etc.), like Patriot Software.

With top-notch payroll reports, you and your clients have the breakdown needed to make projections, budget, fill out Forms W-2, and more. Not to mention, you can rest easy knowing you have all the payroll reports and information right at your fingertips for each and every client.

Topics: Payroll


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