As the year comes to a close, it’s crucial to ensure your payroll is accurate, compliant, and ready for tax season. Follow this Year-End Payroll Checklist to avoid penalties, streamline reporting, and prepare for the new year.
✅ Pre-Year-End Preparation (November – Early December)
1. Verify Employee Information
- Confirm legal names, addresses, and Social Security numbers (SSNs).
- Update W-4 forms if employees have changes in withholding.
- Review direct deposit details for accuracy.
2. Reconcile Payroll Records
- Ensure all payroll runs for the year are processed correctly.
- Cross-check wage payments, bonuses, and deductions.
- Resolve any discrepancies before year-end.
3. Review Taxable Benefits & Compensation
- Account for fringe benefits (gifts, bonuses, company cars, etc.).
- Confirm deferred compensation and retirement contributions.
- Verify health insurance deductions (if applicable).
4. Check State & Local Tax Compliance
- Confirm tax rates for the upcoming year.
- Ensure all state unemployment (SUTA) and disability taxes are filed.
- Review local tax requirements (if applicable).
✅ Year-End Deadlines & Filings (December – January)
5. Distribute Year-End Tax Forms
- Form W-2 (Wages & Taxes) – Due to employees by January 31.
- Form 1099-NEC (Non-Employee Compensation) – Due by January 31.
- Form 941 (Quarterly Payroll Tax Return) – Final Q4 filing due by January 31.
6. Submit Federal & State Tax Deposits
- Ensure all payroll tax deposits are made on time.
- Verify that FUTA (Federal Unemployment Tax) is paid by January 31.
7. Close Out Payroll for the Year
- Process the final payroll run of the year.
- Confirm all bonuses, commissions, and PTO payouts are recorded.
✅ Post-Year-End Tasks (January – February)
8. File Annual Reports
- Form 940 (FUTA Tax Return) – Due by January 31.
- Form W-3 (Transmittal of W-2s) – Due to SSA by January 31.
- State-Specific Filings (Check deadlines for your state).
9. Prepare for the New Year
- Update payroll software with new tax rates.
- Adjust for minimum wage changes (if applicable).
- Set up new payroll schedules and benefits for the upcoming year.
10. Keep Records Organized
- Store payroll reports, tax filings, and employee documents securely.
- Retain records for at least 4 years (IRS requirement).
Pro Tip: Automate Payroll for Accuracy
Using a trusted payroll service like SurePayroll can help automate year-end tasks, tax filings, and compliance—saving you time and reducing errors.
Disclaimer: This checklist is for informational purposes only and does not constitute legal or tax advice. Consult a professional for specific compliance requirements.
