Tie-Out Pack (No Plugs)

Tie Source Tolerance
Register = GL Payroll + GL Zero
941s = W-2s Returns + BSO file Zero with bridge
State sums = federal State copies Zero
Bank = net pay Bank + register Zero

Pair with Payroll Guide, Multi-State, 1099 vs W-2, Filing Deadlines, and Year-End Close.

Checklist

  • Scrub names, SSNs, addresses; TIN-match contractors.
  • True-up bonuses, commissions, fringe in final payroll.
  • Reconcile third-party sick pay and EOR payroll — see EOR.
  • Confirm state IDs and local codes — see Compliance.
  • Lock payroll after final run; restrict voids to controller + CFO per QuickBooks vs Xero.
  • Retain tie-out with preparer/reviewer sign per Audit Procedures.

File in close binder with Bank Rec and Month-End Close.

Worked Example: $12k Bridge That Blocks Filing

Preliminary tie-out shows: payroll registers $1,240,000; GL payroll $1,228,000; 941s sum $1,240,000; W-2 Box 1 sums $1,252,000.

Variance Cause found Fix
GL $12k light December contractor bonuses posted to professional fees, not payroll Reclass to payroll, re-run burden
W-2 $12k heavy vs 941s Taxable fringe (personal car use $9k + GTL $3k) in W-2s, correctly excluded from 941 Box 1 timing Document bridge memo, no correction
State sums $4k over federal One remote employee coded to old state for Q1 File corrected state return, update work-state log — see Multi-State

All three look identical as “numbers don’t tie” — the causes are a reclass, a correct timing bridge, and a state correction. Without the bridge memo, the auditor treats all three as errors. With it, one adjustment and two explained items, and the filing proceeds. Build the bridge table (register → GL → 941 → W-2 federal → W-2 state) as the cover page of the tie-out pack — see External Audit PBC.

Fringe Benefits Deep Dive (The Missed $30k)

Fringe Taxable? Where it lands
Personal use of company car (lease value + fuel) Yes, wages W-2 Boxes 1/5, valued by lease-value or cents-per-mile rules
Group-term life over $50k coverage Excess cost W-2, Table I rates by age
S-corp owner health insurance (>2%) Yes, wages (deductible to owner on 1040) W-2 Box 1, not Boxes 3/5
Relocation (post-TCJA) Taxable wages W-2, grossed-up or not per policy
Gift cards, prizes, personal travel Taxable, no de minimis for cash equivalents W-2, any amount
Working-condition fringe (laptop for work) Excluded if qualifying Document business purpose

Run the fringe questionnaire in October, not December: personal car logs, life-insurance census, owner health premiums, relocation files. Each missed fringe is a W-2c in January — and W-2cs for officers draw auditor attention to the whole payroll control environment — see QuickBooks vs Xero.

December Lock Sequence (Week by Week)

Week 1 (Dec 1–7): freeze master data — no new pay codes, states, or deduction types without controller approval. Scrub names/SSNs/addresses; TIN-match contractors. Week 2 (Dec 8–14): process bonuses, commissions, and fringe true-ups in a preview run; circulate the preliminary tie-out. Week 3 (Dec 15–21): resolve variances, confirm state/local codes, lock void authority to controller + CFO. Week 4: final run, reconcile filings to GL the same day, file state copies, archive the packet with preparer/reviewer sign — see Month-End Close and Record Retention.

FAQ

What causes most W-2c?

Late bonuses, missed fringe, and wrong state coding. Freeze inputs one week before final run.

Who signs off?

Payroll preparer, controller review, CFO lock — separate from HR data entry.

Next Steps

  1. Run preliminary tie-out in November.
  2. Freeze fringe and state codes in December.
  3. Reconcile filings to GL before submission.