Year-End Payroll Checklist for Employers

As the year comes to a close, it’s important to review your payroll, HR, and benefits processes to ensure a smooth transition into the new year. Whether you manage payroll internally or partner with a provider, this checklist will help you stay compliant, organized, and ready for a strong start to the year ahead.

Pre-Year-End Planning

✔️Confirm Payroll Calendar and Deadlines
Review your payroll processing schedule and identify your final pay date(s) for the year. Check federal banking holidays for both the current and upcoming year to avoid conflicts with payroll processing or check dates. Adjust your processing timelines if holidays fall on normal payroll days.

✔️Communicate with Your Payroll Partner or Team
Notify your payroll contact early if any year-end adjustments will be needed—such as bonuses, taxable fringe benefits, third-party sick pay, personal use of company vehicles, or imputed income. Schedule a review meeting in early December to address open items or reporting questions.

✔️Audit Employee Data and Tax Setup
Verify that all employee names, Social Security Numbers, and addresses are accurate. Confirm that each employee is set up with the correct federal, state, and local tax jurisdictions—especially important for remote or multi-state employees. Encourage staff to update their W-4s if their filing status or exemptions have changed.

✔️Review Benefits and Fringe Benefit Items
Review any benefits that require taxable reporting at year end, such as group-term life insurance over $50,000, relocation reimbursements, or personal use of company vehicles. Confirm that all bonuses, commissions, and supplemental pay are captured before year-end processing closes.

✔️Plan for Manual, Voided, and Off-Cycle Checks
Identify any manual or voided checks that must be processed for the current year. Coordinate timing for these adjustments and ensure all checks are properly recorded before closing the year.

✔️Check State and Local Tax Rules
Review your state’s unemployment wage base and withholding requirements for the new year. Make sure your payroll system is updated with the latest tax tables and limits effective January 1, and verify compliance with any local or municipal withholding obligations.

✔️Prepare Systems and Supplies
Confirm access to or order W-2, W-3, and 1099 forms if you issue them manually. Ensure your payroll software or provider has implemented all new-year tax and compliance updates.

Final Payroll Runs & Adjustments

✔️Process Last Payroll and Supplements
Ensure all wages, bonuses, fringe benefits, and reimbursements are included in your final payroll cycle. Review withholding totals to confirm accuracy and avoid over- or under-withholding.

✔️Submit Third-Party Sick Pay and Insurance Information
Request summaries from insurance companies or third-party administrators early in January and forward them to your payroll provider for proper W-2 reporting.

✔️Finalize Manual Check and Void Entries
Submit any remaining manual or voided checks before your final payroll cutoff. If corrections arise later, coordinate with your payroll provider to ensure timely adjustments and accurate reporting.

✔️Reconcile Year-to-Date Totals
Compare totals across your payroll system, general ledger, and tax filings (Forms 941, state withholding, etc.). Resolve discrepancies before year-end forms are submitted.

✔️Verify Tax Deposits and Banking
Confirm all federal, state, and local payroll tax deposits are current and reconciled. Review deposit schedules and verify that all payments have been processed correctly.

✔️Communicate with Employees
Remind employees to review their last pay stub of the year to confirm address, SSN, and deduction accuracy. Encourage them to check benefits, FSA balances, and plan any final contributions or reimbursements before the new year.

Post-Year-End Filing Phase

✔️Generate and Distribute Tax Forms
Prepare and distribute Form W-2 to employees and file with the Social Security Administration by January 31. Issue Form 1099-NEC or 1099-MISC to applicable contractors by January 31 as well.

✔️File Annual Reconciliations
File and reconcile all required federal and state forms, including 941 (Q4), 940 (FUTA), and annual withholding reports. Confirm that reported wages and taxes match your reconciled totals.

✔️Submit Electronic W-2 and 1099 Files
Submit electronic files to federal and state agencies by their respective deadlines, and confirm successful transmission and acceptance notices.

✔️Handle Late Corrections or Adjustments
If errors are discovered after filing, submit amended returns (such as W-2C or 941-X) as soon as possible to minimize penalties or delays.

✔️Prepare for the New Year
Confirm that all new tax tables, wage bases, and deduction limits are active for the first payroll of the new year. Review carryover balances for benefits, PTO, or deductions, and document any lessons learned to improve your next year-end process.

Year-end payroll doesn’t have to be stressful. With early planning, accurate data, and a reliable payroll partner, your business can close the books confidently and start the new year on solid ground.

Need expert help preparing for year-end? Schedule a demo to see how our team can simplify your payroll, HR, and compliance processes year-round.