When the end of the year rolls around, stock plan administrators can find themselves with a full plate as they reconcile dispositions, plan for tax season and try to get ahead of IRS requirements for the year ahead.
However, evaluating and updating year-end processes can alleviate much of the stress brought on by competing needs and priorities.
Getting started
Before digging into a year-end process revamp, take a step back and create a checklist of deliverables needed to complete the process. Once determined, it’s important to set parameters around realistic timelines, expectations and dependencies for each deliverable. From there, it’s time to identify all necessary internal partners.
You should consider partners from legal, accounting, payroll and human resources — but be cautious about adding too many voices that may slow down the process. You may opt to keep some team members simply informed, rather than serve as a decision-maker.
Leveraging automation to overcome obstacles
Some of the most common challenges you may face when it comes to year-end planning are lack of time, resistance to change and managing multiple internal partners.
While addressing all these challenges before year-end may seem daunting, implementing a technology-focused approach can help streamline the most time-consuming tasks, including:
- Reconciling employee stock purchase plan dispositions: This includes confirming that both qualifying and disqualifying dispositions match the number of shares sold during the year.
- Reconciling incentive stock option dispositions: It’s important that incentive stock option dispositions are properly reconciled for accurate IRS reporting.
- Non-US participants/W-8BEN certifications: Non-US plan participants must certify their international status and then re-certify every three years.
Don’t be afraid to ask for help
Establishing a new process is a significant undertaking but it doesn’t have to be done alone. Once you have made the decision to automate, it’s important to truly commit to improving the year-end process.
Set aside time to outline the ideal outcome, engage internal partners who can help implement the new process and — perhaps most importantly — don’t forget to communicate the change to the broader organization. The more plugged-in you are with participants and cross-functional business partners, the better the potential outcomes.
With proper planning and the right stock plan administration provider, leveraging an automated platform can increase reporting accuracy, build the confidence of plan participants and conserve valuable time. With change comes questions. Look to outside resources that can provide seasoned guidance. The equity compensation industry has many experts and providers who can help ensure a smooth transition and answer those questions that arise along the way.
