Closing out the year doesn’t have to be stressful. Use this checklist to keep payroll accurate, employees happy, and your business compliant.
Before the Final Payroll
1. Verify Employee & Contractor Information
Check that names, addresses, Social Security numbers (SSNs), and vendor Federal Employer Identification numbers (FEINs) are correct. Errors here can lead to penalties on W-2s and 1099s.
2. Review Wages, Benefits & Deductions
Look at year-to-date wages, bonuses, overtime, health insurance, retirement contributions, and other withholdings. Catch discrepancies early.
3. Review Disability Paid to Employees
Review any disability paid to employees throughout the year. The totals will need to be recorded on their W-2. This will need to be done before the first of the new year.
4. Reconcile Payroll & Tax Reports
Compare payroll reports with bank statements and quarterly filings to ensure everything adds up.
5. Handle Special Payments & Adjustments
Schedule final bonuses, reimbursements, and any other special pay runs.
During the Final Payroll
1. Process Your Last Payroll
Run your final payroll of the year, making sure all payments are correct.
2. Pay Out Accrued PTO
Follow your policy for unused paid time off.
3. Apply Any Final Adjustments
Include any remaining bonuses, special payments, or corrections.
After the Final Payroll
1. Prepare & Distribute Year-End Tax Forms
- W-2s: For employees, reporting wages and taxes withheld.
- 1099-NEC: For contractors. Distribute forms by IRS deadlines.
2. File With Tax Authorities
- W-3: Summarizes all W-2s for the SSA.
- 1096: Transmittal for 1099s to the IRS.
- 941 & 940: Quarterly payroll and unemployment tax filings.
- ACA: Be aware of your Affordable Care Act (ACA) filing responsibilities.
3. Plan for the New Year
Update payroll policies, review benefit changes, and request new W-4s for employees whose circumstances may have changed.
Following this year-end payroll checklist ensures accuracy, compliance, and a smooth transition into the new year—so you can focus on running your business, not chasing paperwork.
Schedule a call to find out how Counter Point can protect your business and streamline your compliance processes.
