Checklist: What to Do Before Running the Last Payroll of the Year

/ Best Practices, Payroll

Fourth quarter is a busy time in the payroll world. Pair this with the hustle and bustle of the holiday season, and you can understand why mistakes happen at year-end. However, with a little planning and this handy checklist, you can ensure a smooth, stress-free transition into the year ahead.

Before processing your last payroll of the calendar year, complete the below checklist. While this list is extensive, you’ll also want to add any items that apply to your unique business.

Year-end payroll checklist:

  • Review your reports from the previous year-end to account for unique adjustments that you need to repeat this year.
  • Preschedule bonus and adjustment runs as soon as possible to ensure they are included in your payroll run.
  • Check with your accounting and human resources department to determine whether you should include any taxable payments that were processed through accounts payable as part of an employee’s taxable wages (i.e., moving expenses, tuition, reimbursements, health club dues, etc.).
  • Check if you have any terminated employees with required adjustments so that you can account for this information. Remember, you may need to gross up adjustments to cover employee portions of Social Security and Medicare taxes.
  • Verify that you accounted for all voided and manual checks.
  • Contact your third party sick-pay administrator to obtain final benefit amounts and determine if you (or your payroll provider) or the third-party provider will handle the W-2s for these payments.
  • Determine where you will save or store undeliverable W-2 forms.
  • If you haven’t done so throughout the year, report additional wage adjustments on the W-2s. For more information on taxable fringe benefits, review the Employer’s Tax Guide to Fringe Benefits (IRS Publication 15-B).
  • Before issuing W-2s and 1099s, ensure all identifying information (i.e., employee records, names, Social Security numbers, and addresses) for employees is correct. If you fail to do so, you may need to file a Corrected Wage and Tax Statement (Form W-2c).
  • Confirm all 1099 employees have an identification number, as this is required for you to file 1099s with the IRS.
  • Determine if you are an “active participant” in a qualified pension plan during the tax year. If so, the Social Security Administration (SSA) requires that you check box 13.  Review pages 20-28 of the IRS instructions for more information.
  • If you haven’t updated your federal and state labor law posters, order and post them in an area visible to all employees.
  • Make note of postal delivery schedules to avoid unexpected delays during the holiday season.

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If you’re already a Payroll Data client, please contact your client service representative (CSR) with any questions. If you’re interested in hearing more about how Payroll Data can help streamline your payroll process throughout the entire year, contact us now or visit our website to learn more about what our payroll technology, Orbit Payroll, can do to help!