Remembering Shay Litvak Our Co-Founder and CTO

November 1979 - September 2023

What To Include On Your Year-End Payroll Checklist

Year-End Payroll ChecklistYear-End Payroll Checklist
min read
August 21, 2023

It’s exciting to prepare for the new year, and you might be tempted to keep looking forward. But, as a business owner, you need to close out each year properly, especially with regards to payroll. 

There are several year-end payroll requirements mandated by the Internal Revenue Service (IRS) you need to meet each year to prepare for taxes and start the next year right.

So, what exactly should you include on your year-end payroll checklist? Keep reading to find out the steps you need to take before the year ends and before the first payroll of the next year.

Year-End Payroll Requirements

To prepare your business and your employees for tax season, you need to review and verify your financial information before the year ends. It’s also important to review relevant tax documents to make sure you track all payments correctly in the new year.  Finally, you also want to review any changes to state and federal employment regulations that affect your business in the new year. 

Use the lists below to create your year-end payroll checklist and meet all the required filings.

Year-End Payroll Checklist: Before the Year Ends

In addition to sending out your final payroll, you need to verify several items at year-end. Follow along with these steps to ensure your business is prepared to close out the calendar year and get ready for tax season.

How to Prepare for Taxes

Process Your Payroll

Review Regulations

Year-End Payroll Checklist: After the New Year Begins

Your year-end payroll checklist doesn’t stop at the new year. There are a few critical tasks to complete before you send out the first payroll of the new year. Furthermore, January also brings several key tax deadlines. 

Keep reading to see what payroll tasks need to be completed after the new year begins.

Update Payroll Information

File Taxes

Review Regulations

Tips for Smooth Year-End Payroll Processing

Here are a few tips to ensure your year-end payroll processing goes smoothly.

Keep Accurate Records Throughout the Year

Year-end payroll requires several verification steps. Ensure you keep accurate records during the year, so you don’t have to recalculate and re-verify paycheck amounts. 

Make sure all of your employees are correctly classified. Use time-tracking software to keep and record employee hours accurately. Apps standardize the time-tracking process and help prevent human error. 

Finally, don’t wait until year-end to check on your payroll numbers. Schedule quarterly audits to make sure your books are correct.

Use Payroll Software

Using payroll software makes it easy to schedule paychecks and keep accurate records. Your payroll software can help automate tasks, like sending W-2s to employees. 

Find payroll software that can automate paycheck scheduling and tax form preparation.

Remember, the IRS requires you to keep payroll records for two to four years for audit purposes or in case of legal action. So, even after you’ve completed your year-end payroll checklist, digital records come in handy.

Time-tracking and payroll software are excellent tools to help ease year-end payroll stress, but that’s not all. An accurate time-tracking solution keeps your employees happy throughout the year and empowers you to avoid paycheck disputes.

Create a Year-End Payroll Checklist

As a business owner, you have a lot on your plate. It’s a challenge to have to start your annual payroll process over again each year.

Instead, create a year-end payroll checklist that you can consult and work through each year. Include all required steps, plus the items that apply to your business. 

Using the same system each year saves time and ensures you meet all year-end payroll requirements. 

Consult an Accountant

Tax laws change frequently. Rules for deductions fluctuate, and new deductions often appear. If your business grows or undergoes changes throughout the year, you may qualify for tax credits or deductions.

For help managing payroll deductions, work with a Certified Public Accountant (CPA). A professional can help you avoid penalties and maximize tax deductions. 

If you don’t already have an accountant, you can find a directory on the American Institute of Certified Public Accountants website. Alternatively, you can see if your tax software offers CPA consulting hours or ask your business colleagues for a reference.

Get Started Early

Don’t wait until the last minute to verify your year-end payroll information. Give yourself a head-start, so you don’t rush or make mistakes. When it comes to taxes, mistakes can be costly. 

You can find your EIN, verify employee information, and compile written and voided checks as early as October.

When you start early, you give yourself more time to deal with any complications or surprises you might find along the way.

Let’s Wrap It Up: Year-End Payroll Checklist

While the end of the year is often cause for celebration, it’s also a hectic time for employers and business owners. 

You have to meet several federal requirements and make sure your books are in order in time for tax season. On top of that, you still have to run regular payroll and potentially send out bonuses and raises. 

If you want to keep the IRS and your employees happy while you manage your year-end payroll tasks, then make sure you use a thorough checklist. 

For more information on payroll software with time-tracking, check out Hourly today.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.