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The Essential Year-End Payroll and HR Checklist for 2023 

October 26th, 2023 | 3 min. read

By Tara Larson

We all have our unique ways of dealing with stress, and I happen to be one of those people who find solace in making lists. I've even gone so far as to create a master list of all the lists I need to make – yes, I call it the "List of Lists." There's an oddly satisfying feeling that comes with crossing out tasks once they're completed, freeing up valuable space in my mind. When life gets overwhelming, my go-to solution is to start with a list. And this time of year, list-making becomes especially critical. I'm not just talking about the wish list for Santa; I mean a list for everything. With family gatherings, work-related holiday parties, and the stress of finding the perfect gift (Can my dad ever have too many flashlights?), it's easy to become exhausted by it all. 

I might have raised your stress levels a bit by merely mentioning the holiday rush, and if I did, you're not alone. According to a CivicScience poll, nearly half (48%) of all adults admit feeling more anxious than usual during the holiday season. Even our payroll professionals are not exempt from this holiday frenzy. It's about to get chaotic, and there's a lot to manage. So, let's create a Year-End Payroll and HR checklist together.  

Review your Employee Records: Names, SSNs & Addresses 

W2 season is approaching, and while your employees probably won't start worrying about it until January, it’s better for them to start thinking about it now. If any of your employees have recently undergone a name change or change in address, updating this information in your payroll system is crucial before W2 forms are generated. Ideally, your payroll system has an option for electronic W2s, just in case. Handling these updates early can save you the hassle of dealing with returned mail.  

Similarly, if you haven’t confirmed that your SSNs are correct in your payroll software, take care of that ASAP! Missing or incorrect numbers can result in penalties by the IRS and mean delays for your employee.  

Make Note of Additional Income to Report on W2s 

We’re human and sometimes we forget to record things properly. Is there anything related to income you haven't recorded yet in your payroll system? Whether it’s a manual check that slipped your mind, cash gifts distributed at the holiday party, or non-cash benefits, such as using a company car, there could be income that needs to be accounted for when preparing W2 forms. If you’re uncertain about what should be reported or whether any of these situations apply to your case, then get in touch with your payroll specialist for guidance!  

Know Your Deadlines 

You may (and likely should) have a payroll company taking care of these things for you, but you should still have these dates marked on your calendar.  

  • Form W2s must (in most cases) be provided to employees by January 31st. These are filed with the Social Security Administration by the same deadline.  
  • If you are an applicable large employer, you have a deadline of March 4th, 2024, to provide Form 1095-C to employees.  

Review Your Compensation Plans 

You might already have established internal policies for assessing compensation as a part of performance reviews. However, if you don’t, this is an opportune moment to ensure your compensation plans remain competitive in the upcoming year.  

In today’s job market, there’s a significant emphasis on transparent and equitable pay practices. Remember, replacing an employee can cost up to 2 times their annual salary, underscoring the significance of retaining and rewarding your talent. Additionally, keep an eye on any impending changes to minimum wage rates in your state for the new year, and make plans to ensure compliance.  

If you're contemplating year-end bonuses, collaborate with your payroll team to distribute these payments that align with your preferences. Some companies may prefer distributing paper checks during holiday parties, as opposed to direct deposits, so plan accordingly.  

Update Your Handbook 

Your company’s handbook stands as one of the most crucial documents you provide to your employees. It not only outlines your expectations for their behavior but, more importantly, it sets the standard for how the company deals with various issues. These guidelines naturally evolve over time, so it’s essential to ensure they undergo an annual review by the leadership team.  

During this review, you may identify policies that are no longer effectively upheld and may need removal. Additionally, with the ever-changing landscape of federal and state laws, it’s vital to update your policies to remain compliant. Once these changes are implemented, establish a system to ensure employees acknowledge and understand the revisions.  

Next Steps

Phew, it feels like a lot, doesn’t it? If knowing is half the battle, then that means you’re already halfway done! With a well-prepared plan and these critical items on your checklist, you can navigate this time of the year more smoothly and hopefully find the space to cherish moments with your loved ones. As you check off each item, the weight on your shoulders will lighten, leaving you more room to savor the joys of the season with your family and friends.  

We understand that, even with the best intentions, things can get overwhelming. If you find yourself feeling lost and struggling to navigate the complexities of your year-end payroll and HR responsibilities, it might be the right time to reach out. We’re here to help you make this process smoother and less stressful. 

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Another quick thing -- year-end is often bonus season! To help you make those payments in a manner that aligns with your intentions, we’ve put together a comprehensive article on the most effective methods for distributing bonuses to your employees. Check it out here.