The end of the year is nearing, and it’s time to get organized and prepared for your year-end process as a small business owner or HR department of one. This year-end payroll and human resources checklist will help you prepare and ensure you’ve met the requirements for your business.
Year-End Payroll Checklist
For small businesses and HR departments of one, the end of the year can be incredibly complex – and the stakes are high. Errors can lead to erroneous tax returns for employees, leaving them in a position where they overpaid or owe unexpectedly. Here are the items that should be on your end-of-year checklist:
1. Verify Business Information
Confirm that your business information is accurate across your payroll system and any connected tax or benefits platforms. This information will print on all year-end filings and tax forms. Be sure to review:
- Legal business name
- Business address
- Business structure
- Federal Employer Identification Number (FEIN)
- State employer identification numbers
Even small discrepancies can cause filing delays or rejected forms.
2. Review Employee and Contractor Information
Confirm that all employee and contractor records are up to date before year-end processing.
This includes:
- Legal names
- Mailing addresses
- Social Security numbers or taxpayer identification numbers
- Employment status (active, terminated, contractor vs. employee)
Accurate information ensures W-2s and 1099s are delivered correctly and accepted by the IRS and SSA.
3. Notify Employees About Unused Benefits
Notify employees of any benefits that may expire at the end of the year and explain the consequences of not using them.
Common items to review include:
- Flexible Spending Accounts (health and dependent care)
- Paid Time Off balances
- Benefit elections with use-it-or-lose-it rules or limited carryovers
- Retirement contribution limits and deadlines
Clear communication helps employees make informed decisions and reduces year-end questions.
4. Audit Payroll and Tax Records
Conduct a full review of payroll and tax entries for the year to confirm accuracy before final filings.
This audit should include:
- Gross wages and taxable wages
- Federal, state, and local tax withholdings
- Employer tax contributions
- Benefit deductions
- Garnishments or other withholdings
Identifying and correcting discrepancies now can prevent amended filings later.
5. Prepare for Year-End Tax Forms
Determine how your year-end forms will be filed—electronically or on paper.
If filing on paper:
- Order W-2, W-3, and 1099-NEC forms early to avoid delays
If filing electronically:
- Confirm your payroll system or provider is set up for electronic submission with the SSA and IRS
Electronic filing is strongly encouraged and often required, depending on filing volume.
6. Distribute W-2 Forms to Employees
Provide Form W-2 to all employees by January 31.
W-2s may be delivered:
- By mail
- Electronically (with employee consent)
Employees use this form to complete their personal tax returns, so timely and accurate distribution is critical.
7. File W-2 and W-3 Forms with the SSA
Submit all employee W-2s along with Form W-3 (the summary transmittal) to the Social Security Administration by January 31.
Note:
- Form W-3 is filed with the SSA only
- It is not distributed to employees
8. Distribute and File 1099-NEC Forms
Provide Form 1099-NEC to all eligible independent contractors by January 31.
You must also:
- File 1099-NEC forms with the IRS by January 31
- File electronically or by paper, depending on volume and filing method
Proper classification and accurate reporting help reduce audit risk.
9. File Quarterly or Annual Payroll Tax Forms
Ensure all required federal payroll tax forms are filed correctly:
- Form 941 (Quarterly Federal Tax Return)
- File Q4 Form 941 by January 31
- Form 944 (Annual Federal Tax Return)
- File only if the IRS has notified you that you are eligible to do so
10. File Form 940 and Pay FUTA Taxes
File Form 940 (Federal Unemployment Tax Act return) by January 31. FUTA tax payments may be required earlier if your accumulated liability exceeds $500 during the year. Confirm deposits were made timely throughout the year.
11. Prepare for Business Tax Filings
Work with your accountant or tax advisor to file your annual business tax return by the applicable deadline, based on your business structure (LLC, S-Corp, C-Corp, or partnership). Having clean, accurate payroll records will simplify this step significantly.
State-Specific Year-End Payroll Reminders
For employers in Ohio, Indiana, Illinois, and Kentucky
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Illinois: Submit W-2 information to the Illinois Department of Revenue by January 31, complete required IL-941 filings, and review your unemployment insurance rate for the new year.
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Indiana: File Form WH-3 and submit W-2 information by January 31, verify employee county tax information, and update your Indiana unemployment tax rate effective January 1.
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Kentucky: File annual state withholding reconciliation and W-2 information by January 31, confirm any applicable local occupational tax filings, and apply your updated unemployment tax rate for the new year.
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Ohio: Submit W-2 information through the Ohio Business Gateway by January 31, complete any required local tax reconciliations, and confirm your updated Ohio unemployment tax rate for the upcoming year.
State requirements can vary by business type and location. Working with a payroll provider helps ensure all state and local filings are completed accurately and on time.
Simplifying End-of-Year Payroll and HR Work
End-of-year HR and payroll steps can be tedious and monumental when it comes to engagement, retention, and business risk. Tired of trying to manage this alone? ASAP Payroll is your partner, offering payroll and HR solutions that automate each step and give you access to experts in this arena all year long.
To learn more about ASAP payroll or explore solutions to make the end-of-year process easier next year, request a quote today. We specialize in helping organizations automate payroll and payroll tax forms for improved customer service, compliance, and costs. When it comes to end-of-quarter or end-of-year filings, we’ve got you covered!