HR & Payroll Tips To Start Your Year Off Right (2025)

The start of a new year isn’t just about fresh resolutions and gym memberships. It’s also prime time to get your HR and payroll processes in order. Whether you’re a small business owner or an HR professional, taking the time to audit your payroll systems, update employee records, and ensure compliance can save you headaches (and money) down the road.

But let’s be honest: Payroll and compliance tasks can feel overwhelming, especially when laws and regulations change constantly. That’s where Horizon Payroll Solutions comes in. We help businesses navigate payroll complexities with ease, ensuring a smooth start to the year.

Let’s review the key HR and payroll tasks that will set your company up for success in the year ahead.

Reviewing Payroll Compliance for the New Year

Payroll compliance isn’t something you want to put off. If anything, waiting too long can cost you—whether it’s unexpected tax penalties or fines for misclassification mistakes.

Confirm Employee Classification & Exempt Status

Misclassifying employees is one of the most common payroll pitfalls. Whether it’s mixing up independent contractors and employees or failing to properly classify exempt vs. non-exempt staff, the consequences can be severe.

• Independent contractors should meet IRS criteria under the ABC test or common-law rules.
• Exempt employees must satisfy the salary basis and duties tests set by the Department of Labor.
• Misclassification can lead to back wages, penalties, and lawsuits—not something you want hanging over your business.

At Horizon Payroll Solutions, we help businesses review classifications, ensuring compliance with state and federal laws.

Updating Payroll Tax Forms and Withholding

The IRS and state tax agencies require businesses to collect updated W-4 and state tax forms each year. Even small changes—like an employee moving to another state—can affect tax obligations.

• Make sure employees review and update W-4s if they’ve had life changes (marriage, kids, new home).
• Check if your state has updated income tax rates for the new year.
• Ensure payroll systems reflect Social Security, Medicare, and FUTA tax rate adjustments.

Not sure if your payroll system is up to date? Horizon Payroll Solutions provides automated tax updates, so you never have to worry about outdated tax rates messing up your payroll.

Conducting an Annual Payroll Audit

If you have never performed a payroll audit, this is your sign to start. An annual review can help catch errors before they become costly fines.

Verifying Employee Information

Incorrect employee details can cause issues with payroll deposits, W-2 filings, and tax reporting. Take time to verify:

• Employee names match Social Security records (typos happen more than you think!).
• Direct deposit details are correct to avoid rejected payments.
• Emergency contacts are updated—an often overlooked but important detail.

Reviewing Payroll Software & Outsourcing Options

Is your current payroll software still meeting your needs?

• It may be time to upgrade if you’re still using manual spreadsheets.
• Horizon's cloud-based payroll systems integrate with time tracking, HR, and accounting tools.
• Outsourcing payroll to a provider like Horizon can save time and prevent compliance issues. 

HR Policies and Employee Handbook Updates

Your employee handbook isn’t just a collection of policies—it’s a living document that should evolve with employment laws and company culture.

• Update policies on remote work, PTO, DEI initiatives, and disciplinary procedures.
• Ensure new laws are reflected, such as paid leave mandates and minimum wage increases.
• Clearly outline expectations for overtime, sick leave, and benefits eligibility.

Preparing for Year-End Reporting & Tax Filing

Tax season doesn’t have to be painful if you plan ahead.

• Verify W-2s and 1099s for accuracy before submission deadlines.
• Close out the previous year's payroll reports and tax filings.
• Stay ahead of IRS and state tax deadlines.

Staying on Top of IRS Deadlines

Deadlines sneak up fast—missing them can mean penalties and interest charges. Mark your calendar for:

• January 31: W-2 and 1099 distribution deadline.
• April 15: Federal payroll tax filings due.
• Quarterly: IRS Form 941 filings.

Make Sure You Completed Everything You Needed To Close Out 2024

The end of the year is just as important as the beginning, and if you didn’t get around to properly closing out 2024, it’s not too late. A smooth transition into the new year starts with wrapping up all outstanding payroll and HR tasks from last year. Not sure what you missed? Use Horizon Payroll Solutions' 2024 year-end checklist to ensure you're in the clear. 

Conclusion: A Strong Start for a Successful 2025

A well-organized payroll and HR system ensures smooth operations throughout the year. By tackling compliance, benefits, automation, and employee training early, businesses can avoid costly mistakes and build a more efficient workplace.

Horizon Payroll Solutions is here to help. Whether it’s payroll processing, tax compliance, benefits management, or HR support, you can count on our team for the necessary solutions for your business. Ready to streamline your payroll this year? Contact us today to get started. 

This content does not constitute legal advice and does not address federal, state or local law.