Your Critical Year-End Payroll Checklist
Preparing your payroll for year-end can be a daunting task, with numerous details to manage and deadlines to meet. From handling bonus payments to ensuring employee information is accurate, getting a head start can save you time, money, and stress as the year wraps up.
Follow your year-end payroll checklist for a seamless year-end—so you can get out of the office and enjoy the holiday season without the hassle of forgotten year-end responsibilities.
Payroll Year-End Factors to Consider
If you’re spearheading payroll’s year-end operations, keep these considerations in mind:
1. Bonus Payroll
If you have any employees receiving a bonus at the end of the year, that extra income is taxable.
To prepare, determine if you’ll run the bonus payroll separately or within a normal payroll run, and coordinate with your Payroll Specialist accordingly.
A few words of caution: Ensure sufficient funds are available before running your bonus payroll. Every account has an ACH limit, and if you exceed 25% of that limit for your bonus run (or if you exceed the $100,000 federal liability threshold), you may need to send a wire instead.
2. Fringe Benefits
Fringe benefits are any benefits an employee receives outside of their wages, like reimbursement for moving expenses.
Your team should pay especially close attention to the payroll impact of the most common fringe benefits, such as:
- Personal Use of An Automobile – If an employee drives a company vehicle throughout the year for personal use, that value should be included as taxable wages on their federal and local taxes. This value should be in Box 14 of the employee’s W2.
Talk to your accountant for assistance in calculating the proper amount.
- 2% Shareholder’s Health Insurance – If anyone owns 2% or more of your business and has their health insurance premiums paid by the company, those premium payments are taxable. They should be reported in Box 14 of the individual’s W2.
Talk to your accountant for additional assistance.
- Group Term Life – Any life insurance policy worth more than $50,000 is taxable and eligible for Federal Withholding.
Talk to your accountant for assistance in calculating the proper amount.
If you offer a variety of benefits to your employees, consider investing in a self-service app that helps employees quickly sign up for and track their benefits!
3. Employee Information For W2s and 1099s
Review employee social security numbers and addresses. If you find errors, notify your payroll specialist by December 8th with corrections.
Remember: It’s costly to correct information on W2s or 1099s after your final payroll has been processed for the year. Any changes or additions may result in additional fees and amended returns.
4. Third-Party Sick Pay
Third-party sick pay includes both short- and long-term disability payments. Let your payroll specialist know by December 8th if you have third-party sick pay to report.
Contact your Third-Party Sick pay Administrator before December 8, and have them send the year-end benefit summary by December 15.
Additional Facts to Know for 2024–2025
Here are the latest limits to know for year-end, especially around retirement services and retirement benefits:
1. Social Security Wage Base
The wage base has increased to $176,100 for 2025, meaning only the first $176,100 of an employee’s earnings is subject to Social Security tax.
2. 401(k) and Roth 401(k) Contribution Limits
The maximum deferral limit is now $23,000, up from $22,500 in 2023. Individuals aged 50 and over can contribute an additional $7,500 as a catch-up contribution, making the total possible contribution $30,500.
3. SIMPLE IRA
The deferral limit for SIMPLE (Savings Incentive Match Plan for Employees) IRA plans has increased to $16,000 for 2024, with a catch-up contribution of $3,500 for those aged 50 and over.
4.Traditional and Roth IRAs
The maximum contribution limit for both remains at $7,000, with a catch-up contribution of $1,000 for individuals aged 50 and older.
Find Hands-On Year-End Payroll Support
Ever since we opened our doors in 2012, we’ve emphasized customer service. Unlike many of the “big box” payroll shops, we focus on genuine, personalized support.
That means showing up every day—including in the fast-paced weeks of year-end.
If you’re looking for a truly dedicated partner, contact us!