Year End Procedures

(OWNER STATEMENTS AND 1099s)

Typically, you may print 1099s for owners after you have completed December owner statements. Specifically, you must transfer owner balances for December (P-S-N) then you may print 1099s any time prior to producing January owner statements. You may also print the income/expense summary (P-R-I) for all owners at this time. In system setup (H-A), the field on screen number 8, "Statement month after which to do owner 1099s", controls which month 1099s should be calculated through and when year to date statistics should be zeroed. If this field is a '12', then 1099s should be printed after December is closed and year to date statistics will be zeroed before printing January owner statements. If this field is '11', then 1099s should be printed after November is closed and year to date statistics will be zeroed before printing December owner statements.

When you are ready to print January (or December if set up that way) owner statements, you will be faced with the option to zero out the previous year statistics. The message will appear as follows:

Answer "Yes" if you are ready to zero the previous year annual statistics. Just be certain that you have already printed the 1099s before allowing the statistics to be zeroed. Entering an 'L' on this screen will include 13 months statistics on the owner statement, however, the 1099 information will only include 12 months. Entering a 'C' will take you back to the menu for end of month processing. NOTE: You MUST answer 'Y' before closing January (or December if set up that way). Failure to do so will cause the annual statistics to continue to accumulate resulting in overstating the 1099 income to owners in the following year. The transferring owner balance procedure does not verify that statistics have been zeroed.

It is not necessary to make any year-end general ledger entries in a trust only business.

YEAR END PROCEDURES FOR GENERAL ACCOUNTING

(W2s AND GENERAL LEDGER)

W2s can be printed any time after the last payroll for the year has been produced. They may be printed multiple times, and also may be printed to a file to copy onto a disk for magnetic media reporting. The government requires that W2s be in the mail to employees by January 31.

Closing out the General Ledger in First Resort for the year only needs to be done for clients utilizing a consolidated chart of accounts in First Resort (both Rental and Operating activity are in one set of books) and is a very simple process that may be done at any point in time. The following example is as if your fiscal year ends December 31.

1. Make any entries necessary to the general ledger for depreciation, amortization, inventory, etc.
    

2. Print a final balance sheet.
    

3. If the balance sheet is satisfactory, the dollar amount on the balance sheet in the "Current Year Income" account must be moved into the "Retained Earnings" account. This may be accomplished with a journal entry, dated January 1, that debits "Current Year Income" and credits "Retained Earnings" - assuming there is a gain for the year. If a loss has occurred, the opposite accounting needs to take place.

OVERVIEW

Once a year you face the task of reporting to the government income paid out to some Vendors, Businesses and Owners, and to all Employees. This guide is intended to help you process these reports quickly and easily.

The good news is that this is merely a reporting function. In most cases, all you are going to do is print out information about money actually paid out over the course of the calendar year. Based on your business set up, the FRS software has been accumulating these totals throughout the calendar year.

If you were an existing FRS client who began the calendar year with zero balances in the files where these statistics are accumulated, or a new client who began during the year and entered beginning balances, the reporting will be very straightforward.

Following these guidelines will answer your questions in most cases. If we can help you in any other way, please do not hesitate to call the FRS Support Staff at 866-746-6347 or email to support@firstres.com.

GETTING PREPARED

First Things First!

1. First Resort recommends copying ALL data files onto a workstation local hard drive or CD, in the event of the need for a future resubmission to the IRS. Copying the files in their current state allows them to be reused to recreate 1099 files in the future if needed. We recommend copying all files in the Accounts folder on your server or host PC to a folder on a local hard drive.
    

2. Verify that your Employee, Owner and Vendor names, addresses and tax ID numbers are current and accurate. FRS reports which will assist you include the W2 report for employee information (Q-R-W from the Application Selection Menu - run them on plain paper for this purpose), the Owner Address Report (P-T-A), and the AP Vendor Listing Report (E-R-C for Property Management Accounts Payable Vendors; C-R-C for Business Accounts Payable Vendors - use the detailed format). Also, verify your Employer Identification Numbers are accurate in system setup.
    

3. Coordinate with your accountant as necessary to understand your particular needs and requirements. FRS does not tell you what to report, but our software is designed to help you print the forms and create electronic files as needed. Note: Due to IRS changes LAST YEAR to electronic file formats; it is REQUIRED to use FRS version 10.20 or greater when creating 2008 Electronic Media 1099 files.  When printing hard copy 1099 forms, FRS version 10.03 or higher is REQUIRED to produce properly-formatted hard copies. For W2’s, you must use version 10.20 to print W2’s.
    

4. Contact your IRS District Office to obtain the Instructions and/or forms that apply to your business. Reporting electronically requires that you apply to the IRS well in advance of the due date of the returns. 1099 and W2 Forms are commonly ordered through your business’ normal forms supply source. It is not unusual to order up to three times as many forms as needed because of the potential for misaligned printing and the inevitable deadline that might not give you time to get more forms later.

What the FRS Software’s 1099 and W2 Reporting Options Do

5. These reports are designed to complete the required IRS forms for distribution to the people and businesses that received certain income from your business. They also produce a hard copy report for the IRS and/or electronic files for those clients who are required to use or choose to use that method of reporting.                          

When to print the reports

Generally, January 31^st is a key date for sending 1099’s and W2’s to Recipients (Employees, Vendors, Owners, etc.) and February 28^th for filing with the IRS. Please read your IRS Instructions for exact deadlines that apply to your business, or ask your accountant. When to create your 1099 and W2 Statements and reports will be determined by your particular needs and resources.

Basic Necessities

Clean Data - Avoiding the GIGO (garbage in-garbage out) syndrome

Have you verified your Employee, Owner and Vendor names, addresses, and tax ID numbers? If not, begin by doing so now. NOTE: to tell the difference between tax ID types (the IRS calls it a TIN#), the data field in our system expects the number to be entered with appropriate dashes. For example, an individual Social Security Number (SSN) must look like nnn-nn-nnn and a corporate or partnership Employer Identification number (EIN) will look like nn-nnnnnnnn. Our system tells the difference by the placement of the dash in the second or third position. Read the IRS Instructions or ask your accountant for advice on missing or inaccurate tax ID numbers.

IRS regulations require the removal of titles from recipient names. If you have placed titles such as Mr., Ms., or Dr. in any Owner names they must be removed prior to producing 1099s, then replaced afterwards!

Forms and Electronic Files

A sufficient supply of blank 1099 and W2 forms are required for reporting (see "First Things First" on Page 1 of this document). In current versions of our software, both laser and dot matrix printer forms are supported. Electronic reporting may be required for your business. It is an option for many other businesses. In order to use this type of reporting, you must have applied to the IRS in advance, at least 30 days before the due date of the returns (45 days in some cases). You should call your IRS District Office for details and guidance.

Printing Owner 1099’s

How to get there:

From the main menu, select P (Property Management Functions), T (Print Labels, 1099s, etc), Y (Print 1099’s for Owners). The following screen will appear:

Print or Display 1099's for Property Owners
 

:    :

:      :

1. Enter P to PAUSE to view each 1099, select only certain records to report, and/or edit the income amount and tax ID for each owner before printing; OR enter an "A" to select all and enter the minimum income level which will be reported (see the IRS Instructions or get accountant advice).

2. You can select to exclude printing 1099s for Corporations (any record that has a tax ID number with a dash in the third position – be aware that choosing this option will also exclude printing 1099s for Partnerships).

3. You can also select to exclude printing 1099s for any record whose tax ID number is blank. Read the IRS Instructions or ask your accountant for advice on missing or inaccurate tax ID numbers.

The next 3 fields are used only if you are required to report to the IRS electronically.

4. Enter "N" if you are going to report to the IRS by supplying a copy of the forms. Enter "Y" to output 1099 information to a file if you are going to report to the IRS electronically and this is your final run. NOTE: If you are printing a trial run of your 1099’s then leave this field as "N", even if you are required to submit information electronically. Note: when answering ‘Y’ to output 1099 information to a file, be sure to select one of the available ‘Display, Print, View’ options at the bottom of the screen; do not attempt to utilize a hidden option ‘F’ to save to a file or combined electronic format and paper format 1099 information will be sent to the file and it will be rejected by the IRS.

5. The next two fields, Payer Name Control and Transmitter Control Code, are furnished to your business by the IRS if you are going to report electronically. If you are not reporting electronically, you may leave these two fields blank.

6. Next you should select to Display, Print, View, or Cancel the 1099 printing process. The Display option will show you the information that will be printed, however, it is not in the format of the 1099 form. The Print and View options will output in the format required for the form. You can print to plain paper for any trial runs and still be able to print to the 1099 form later.

If a "Y" was entered in "Output a 1099 file to disk for magnetic media reporting", a prompt will appear on one of the following screens "Enter the file name to put the report in". When this message appears, you should enter IRSTAX.O07 (Owners, 2008). IRSTAX should not be used without an extension because the IRSTAX name must be used on each disk submitted to the IRS (i.e., owners, vendors, W2). This will create a file with that name in the \ACCOUNTS directory of your system (or in whatever directory the software is located.). You will also see the following screen:

Set Magnetic Media 1099’s Options

:                      :

You must specify a Contact Person. If you input your Payer Name Control and Transmitter Control Code on the initial 1099 input screen, their values will show on this screen. If you did not input this IRS-supplied information on the initial 1099 input screen, be sure to do so now. For initial submissions to the IRS, leave the 3 indicator fields at the bottom of the screen at their default values. The Replace Indicator and Correction Indicator fields are for use when re-submitting electronic files to the IRS.

If you selected "P to PAUSE to allow for 1099 selection", each account will be displayed. Although you may select M to Modify (like an Edit command) to correct the amount or tax ID information shown, this will not print out properly for owner 1099s. Instead, please use the 1099 override feature found on the owner setup screen   (P-A-O) to manually change owner 1099 amounts. If used for vendor 1099s, any changes you make will also update the vendor records. You can also select S to Skip printing a 1099 for this owner, you can select P to Print a 1099 for this owner, or you can press C to Cancel the process.

If you selected P to Print any time during this process, you will be prompted to select the printer where the forms are located, then you will be prompted with a screen that allows you to print a void 1099 to verify alignment (V), to begin printing 1099 forms (P), or to select the type of 1099 you are using, laser or dot matrix, (T). If you are using Laser 1099’s, then select the option for 8.5 X 11 Preprinted Laser Form. Once this form type is selected, then two more options will appear on this screen. One is to print the Instructions for Alignment (A), the other is to set the printer alignments (S). Please print and follow the alignment instructions before proceeding or your 1099s will not print properly. When you press A to print the instructions, your screen will not change, nor will you see the normal "P to Print" reminder. This instruction page also serves as an alignment template. Use it together with a blank 1099 form to determine the correct alignment as indicated in the instructions.

After all 1099’s have been printed, you will be prompted to print the 1099 totals report. Next, either change the paper in the printer indicated to plain paper, or select to change the printer that the report should go to.

Tip: Do some of your owner 1099s seem to not be printing? First, check for the presence of a 1099 override value in P-A-O for affected owners. If this condition exists, visit P-A-S for that unit and check the value of the INCOME category. If the value is zero, the system will not 'see' the override entry in P-A-S. To fix, edit the INCOME value to some non-zero amount.

PRINTING VENDOR 1099’S

Complete these statements and electronic reporting in the same manner as the Owner 1099 instructions given previously. The menu options are E-R-Y or C-R-Y depending on your business setup options.

The only difference between printing Owner 1099s is the "Y" screen where you choose which year to print 1099’s, Previous or Current. If you are reporting to the IRS electronically, a good name to use for the file when prompted is IRSTAX.V07 (Vendors, 2008).

PRINTING EMPLOYEES’ W2 STATEMENTS

How to get there:

Printing W2 statements and reports is similar to the process for 1099’s. From the main menu, select Q (Payroll Functions), R (Print or Display Miscellaneous Payroll Reports), and W (Print Employee W2’s). The following screen will appear:
 

Verify that the Federal EIN and State Employer numbers at the bottom of the screen are correct. If they are not correct, then edit the numbers on Screen 1 of System Setup before proceeding.

Enter the year for which you want to produce W2’s. Leave the next field at zero to print W2’s for all employees or enter an employee number to begin with if necessary.

The next two fields are used only if you are required to report to the IRS electronically.

Enter "N" if you are going to report to the IRS by supplying a copy of the forms. Enter "Y" to output W2 information to a file if you are going to report to the IRS electronically and this is your final run. NOTE: If you are printing a trial run of W2’s, then leave this field as "N", even if you are required to submit information electronically. In the next field, enter your state FIPS numeric code to be included in the electronic reporting as furnished by your state. If you are not reporting electronically, then leave this field blank.

Next you should select to Display, Print, View, or Cancel the W2 printing process. The Display option will show you the information that will be printed, however, it is not in the format of the W2 form. The Print and View options will output in the format required for the form. You can print to plain paper for any trial runs and still be able to print to the W2 form later.

If a "Y" was entered in "Output a 1099 file to disk for magnetic media reporting", a prompt will appear on one of the following screens "Enter the file name to put the report in". When this message appears, you should enter W2REPORT.W07 (W2’s, 2008). W2REPORT should not be used without an extension because the W2REPORT name must be used on each disk submitted to the IRS. This will create a file with that name in the \ACCOUNTS directory of your system (or in whatever directory the software is located).

If you selected P to Print any time during this process, you will be prompted to select the printer where the forms are located, then you will be prompted with a screen that allows you to print a void W2 to verify alignment (V), to begin printing W2 forms (P), or to select the type of W2 you are using, laser or dot matrix, (T). If you are using Laser W2’s, then select the option for 8.5 X 11 Preprinted Laser Form. Once this form type is selected, then one more option will appear on this screen to set the printer alignments (S). You can adjust the left and top margins as necessary in order to get the W2 forms to align properly.

After all W2’s have been printed, you will be prompted to print the W2 totals report. Next, either change the paper in the printer indicated to plain paper, or select to change the printer that the report should go to.

ELECTRONIC REPORTING

If you are not reporting to the IRS electronically, then skip this section.

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Special Note: If you need to file W2s electronically, you MUST use FRS version 10.17 or higher to create a properly formatted electronic W2 file!

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You are ready to do this step if you have printed your final copy of 1099s or W2s and have created the files for each as instructed previously. Verify the file names in the instructions you receive from the IRS for filing electronically. The IRS will no longer accept 3 ½” diskettes for filing information returns; they must be filed electronically via the Internet at http://fire.irs.gov. The IRS encourages first-time electronic filers to submit a test file prior to submission of production data. For additional information on the procedures for electronic filing see IRS Publication 1220, available for download from www.irs.gov. The file(s) to be electronically submitted to the IRS will be saved in the \ACCOUNTS folder on your server or host PC (note: ‘host’ PCs on Peer-to-Peer networks will find First Resort data on the C: drive, while other PCs on such networks will find First Resort data on the F: drive. Contact First Resort Support if you are uncertain about the location of your First Resort data). Refer to the IRS Instructions or your accountant if you have any questions on report content.  

 Congratulations!  Year-end is complete!