The complete year-end payroll checklist for 2024

Out with the old, in with the new. That’s the motto for many businesses as the year comes to a close. But before you can jump straight into all the exciting projects you have lined up, you first need to wrap up the current year. This includes getting all your year-end payroll processing and reporting done.

Year-end is a busy period in payroll. As the financial year comes to an end, the payroll department has to run a detailed check of employee information, salary data, tax payments, and more before filing the mandatory year-end tax reports. Additionally, there are tons of things to prepare for the new payroll year.

We have created the ultimate payroll year-end checklist to help you manage your year-end payroll processing, fulfill all your payroll obligations, and start well-prepared into the new business year.

Most items on your end-of-year checklist for payroll need to be dealt with after the final payroll run is over. However, there are several things you can already do in the weeks before the last paychecks are issued to avoid work overload in the payroll department. Year-end payroll preparations include:

• Setting and scheduling year-end bonuses,

• Gathering payroll tax forms and recording and verifying all payroll processes that have been completed in the current year,

• Checking employee information for completeness and accuracy (names, addresses, payment information, social security numbers, necessary tax forms, updated list of joiners and leavers, etc.),

• Reminding employees to update their information if their personal circumstances have changed,

• Verifying employer information, such as employer tax number and employer social security number,

• Checking leave and overtime accruals and reminding employees of unused PTO, compensatory time off for overtime, and more,

• Updating special tax items, such as fringe benefits, employee expense reimbursements, stock options, bonuses and commissions,

• Double-checking filing requirements (federal, state, and local requirements) and requesting reports and information needed to complete tax filings, and

• Creating a list of jurisdictions that require tax returns, information statements, and more (applicable only for businesses with a multi-country payroll).

December is arguably one of the busiest periods in payroll. While most other employees are only concerned with the upcoming holidays, the payroll department is under enormous pressure to wrap things up for the year.

The final payroll run of the year is particularly challenging because the time available for processing is shorter and payments need to be scheduled earlier because of the impending bank holidays. Plus, with commission payouts and end-of-year bonuses, there are additional elements to consider when processing payroll.

Here are a few tips for a smooth December payroll run:

• Adapt your payroll processing schedules,

• Outline the additional requirements that apply to December payroll,

• Schedule the leave of your payroll team in a way that ensures payroll is taken care of, and

• Start collecting employee timesheets and other payroll-related information early.

Lano Blog

5 tips for a smooth December payroll

Read more

Once the final payroll run of the year has gone through and salary payments and bonuses have hit employee bank accounts, it’s time to really wrap things up in the payroll department. Here are some tasks that definitely shouldn’t be missing on your year-end checklist for payroll:

• Year-end payroll reconciliation: The reconciliation process for payroll at the end of the year includes the reconciliation of wages and taxes, bank statements, accounts payable and third-party payments, and reconciliation of the business’s general ledger account to make sure that the financial statements match the business’s payroll transactions.

• Outstanding payments: Before finalizing your payroll reports and closing the books for the year, make sure to check for any outstanding checks and payments.

• Final payroll audit: A payroll audit might be a lot of work, but there is no better way of ensuring that all your payroll data, processes, and records are in order. Once the audit is completed, you are well-prepared for wrapping things up for the year.

• Employment status review: Businesses that work with different types of workers, such as freelancers, full-time employees, and independent contractors, should use the end of the year to carry out randomized employee misclassification checks to make sure all their workers are properly classified and avoid any disguised employment risks.

• Reconciliation of active payroll employees and list of terminations: Employee termination is a complex process that involves a variety of different tasks. Before closing the payroll year, make sure to check that all terminated employees have been properly removed from your payroll.

• Year-end payroll reporting: The final item on your year-end payroll checklist is to finalize your tax reporting. This includes preparing fourth-quarter payroll tax returns as well as collecting all the necessary information for the required annual tax reports, such as payroll summary report, employee summary report, and more.

Lano Blog

2024 HR year-end checklist to finish the year strong

Read more

Wrapping up the closing year is only half the work that needs to be done in payroll between December and January. The second set of items on your payroll end-of-year checklist should be focused on preparing payroll for the new year. Payroll preparations for starting the new year strong include:

• Updating salary information: The annual evaluation interviews that often take place at the end of the year typically go hand in hand with pay raises and other changes in employee compensation packages. Salary and other compensation changes need to be implemented in time for the first payroll run of the new year.

• Preparing next year’s payroll and compliance calendar: A payroll and compliance calendar offers a comprehensive overview of all the relevant due dates for tax filing and reporting, public holidays, and more. As for next year’s payroll processing schedule, it’s necessary to schedule the end dates of pay periods, pay dates, and quarter closing dates to make sure they don’t overlap with public holidays.

• Updating payroll policies and introducing new payment methods: The start of the new payroll year is the perfect occasion to make changes to existing payroll policies or create additional policies to improve payroll governance. Introducing alternative payment methods, such as Earned Wage Access (EWA), is also something to tackle as the year comes to an end.

• Checking for new laws and regulations affecting payroll: Many new laws and regulations enter into force at the beginning of a new year so it’s important to use the last weeks of December to check for legal changes affecting payroll and make sure the payroll system is updated to comply with the new requirements.

• Updating payroll systems to new payroll tax rates: Most countries adjust their tax rates and the wage basis for social security contributions on an annual basis. In order to ensure that your payroll calculations are accurate right from the beginning of the new year, you need to update your systems in a timely manner.

• Completing payroll records for the closing year: Keeping payroll records is an important part of payroll compliance. The end of the year is a good moment to check your payroll records for completeness, add any missing records, and dispose of any documents that are no longer needed.

• Changing payroll providers: Year-end is arguably the best time for changing payroll providers. Aligning the switch of your payroll services with the beginning of the new year saves you the trouble of having to transfer all the data relating to the ongoing tax year from your current provider to the new one.

Lano Blog

Why now is the best time to switch payroll providers

Read more

Even with a detailed year-end payroll processing checklist, it’s easy for businesses to forget something when wrapping up their payroll for the year, which may result in fines for non-compliance and trouble with the respective tax and social security authorities. Outsourcing payroll to an experienced payroll service provider can prevent this risk.

Lano works with a global network of trusted payroll partners that offer their services across a range of more than 170 countries. Find a suitable payroll provider for your business in record-time and put your year-end payroll processing in the hands of real experts. Book a demo with one of our payroll experts to learn more about Lano’s global payroll services.