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4 min read

Our End-of-Year Payroll Checklist

As the holiday music pipes through office speakers and attention wanders to festive plans, even the most organized business leader could overlook tying up loose ends for the year in payroll. But wandering entirely away from those lingering year-end tasks creates a messy and stressful scenario come January! Avoid spreadsheet panic and employee complaints next month with this checklist guide - our tried and true roadmap for wrapping up payroll for the year in proper order!

We designed our year-end payroll checklist knowing all too well the mounting chaos threatening to undermine the last payroll cycles of the calendar year. So let us walk you through step-by-step, even sprinkling helpful preparatory reminders to guarantee no stones are left unturned when you reach the following year.

Year's End Can Be a Stressful Time for Businesses

The convergence of year-end closing activities like financial reporting, tax documentation preparation, budgeting, and progress planning for the next year can really pile on the pressure! Maintaining your business’s normal operations with lighter holiday staffing also intensifies demands for HR and payroll managers.

However, overlooking necessary final payroll requirements not only causes employees potential issues, like receiving accurate tax information and bonus payments promptly, but could also yield penalties for your company due to non-compliance! 

Staying On Top of Payroll Tasks Should Be a Top Priority

As tempting as diverting complete focus towards imminent holiday festivities may be, dedicating adequate hours to tidy up outstanding payroll items should take precedence for conscientious companies. After all, lagging on processing the last bonuses or taxes for this cycle risks major disruptions to start the next fiscal year, never mind potential staff dissatisfaction. Leaders who proactively finalize year-to-date reporting and payroll-related compliance documentation also demonstrate organizational prowess, as promoting current employees’ payroll assurance now improves workforce retention later.  


Horizon's End-of-Year Payroll Checklist

Reference this general checklist to keep your year-end payroll process running smoothly! Feel free to contact our professional team at Horizon with any questions or concerns. 

Remind Employees to Review Tax Withholdings

Before payroll cutoff dates in mid-December, prompt employees to review and verify current federal and state income tax liabilities and corresponding payroll withholdings levels match their circumstances. This allows a sufficient opportunity to submit updated W-4 forms that readjust withheld payroll taxes from pay periods if they find extra should be drawn or if sums were overpaid during the current year, warranting decreased upcoming deductions. Notifying staff through multiple channels provides ample prompting, and follow-up confirmation of receipt helps guarantee the adjustment process for January’s first pay cycle.   

Calculate Any Year-End Bonuses

If company leadership convenes discretionary or contractually promised performance bonuses for staff as the year concludes, tabulate the exact qualified amounts owed to each employee. Then, integrate sums alongside regular wages within the designated payroll processing round (or schedule a separate one-off bonus payroll if preferred). Remember, supplemental income tax withholding rates apply for bonus payments above defined base salary levels, often requiring extra documentation!

Review Salaries and Minimum Wage Increases

The close of Q4 allows businesses to assess workforce payment structures and employee wages annually. Analyze whether certain employees’ salaries warrant upward adjustment based on crucial contributions or evolving roles. Similarly, all personnel must confirm adherence to regulated federal, state, or local minimum wage changes effective January 1. Implementing modifications before the new calendar year commences keeps everyone rightly compensated. 

Confirm Your Payroll Schedule

Carefully double-check planned payroll timing and flows for Q1 of next year. If any pay cycle cutoff, processing, or pay dates shift relative to previous year arrangements (for example, to allow leeway surrounding holidays), formally notify all affected employees and management. Specifically, call attention to timing variances likely to impact budgeting, like early January’s first paycheck compared to the previous year. Always cross-confirm amended payroll calendars synchronize across finance systems to prevent disruption integrating the new, internally-publicized dates.    

employee benefit trends 2023

Prepare W-2 and 1099 Data by Jan. 31st

Specific annual tax reporting and documentation confront firmly mandated deadlines at January's end. Namely, employers must finalize tax forms and formally issue W-2 wage statements to current employees and 1099 independent contractor payment summaries by January 31st!  

Confirm Employee Information

Well before the last payroll cycle of the year, double-check all active employee legal names, social security numbers, current mailing addresses, and similar data. Identifying information discrepancies early on better guarantees accurate wage reporting across January 31st-issued W-2s to prevent individual filing complications or penalties for company non-compliance. 

Prepare Other Tax Filings

In conjunction with transmitting W-2 pay details on annual employee earnings statements, wrap up total year calculations associated with supplemental company tax liabilities like employer-portion social security tax payments. Also, formalize any 1099-MISC company contractor documentation protocols, if applicable.

Discard or Destroy the Appropriate Files

Finally, as administrators tackle closing reporting for the payroll year, they should take the time to identify aged records with satisfied regulatory retention periods. Safely purge obsolete physical and digital payroll files according to industry best practices! Generally speaking, companies should securely discard payroll records older than seven years containing personally identifiable employee information. Remember to cross-shred sensitive staff salary history documents before recycling any other dated payroll material.  


Horizon is a Trusted Payroll Provider

For over 20 years, Horizon has delivered simplified, legally compliant payroll solutions to businesses across a variety of industries. Our expertise spans beyond payroll and HR, enabling us to provide customers with unmatched quality and value!  

Top-Rated Payroll and HR Solutions Since 1999

Since establishing our pioneering services in 1999, Horizon has earned distinction as a top-rated provider of the following services:

• Payroll Processing 
• Time and Attendance Tracking 
• HR Administration 
• Benefits Management 
• Compliance Reporting 
• Recruitment and Onboarding 

High client satisfaction and industry accolades year after year reinforce our company’s proficiency in meeting business needs for customized payroll solutions and HR support. 

Contact Us Today for More Information

We get it – end-of-year payroll tasks can feel like an endless game of jumping through hoops and untangling knots. Month-end reporting, tax withholding changes, leave accruals; no wonder your head spins trying to manage it all!

But what if turning these tasks over to professional payroll teams could give you time to focus on your real priorities? Our simplified payroll solutions can be customized to your needs in order to take payroll off your crowded plate! Contact our team today for more information and a free consultation. 

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