Year-End Checklist

Before the department can begin the new year, it must complete the old one. Making sure that the all year-end items have been completed is essential. Here is a sample checklist that can assist a payroll department create its own list to use at year-end to make sure that nothing gets left undone. The list should be customized to reflect a company’s specific items.

• Do the State of the Payroll memo by December 1. This memo will include the plea for address updates from the employees
• Set up a system for collecting employee address changes. This could include an Intranet site, fax number, e-mail address, or dedicated phone line
• Update all addresses as they are received
• Set up a year-end committee. This committee should consist of everyone or every department that is involved with the year-end process. Depending on the company and type of system, this could include accounts payable, human resources, accounting, and IT. The committee should meet to organize year-end among all the departments with a central checklist to make sure all jobs are completed on time. The checklist should assign each task to a department or person with deadlines that must be met
• Make a list or update last year’s list of all fringe benefits offered by the company that are not paid through the Payroll Department but are taxable or reportable on the Form W-2. These may include car allowances, moving expenses, educational assistance, or dependent care payments. Verify with the appropriate department that the information, if not already received by payroll, will be available for processing by the final payroll of the year
• Verify by the last payroll processing that all information requested in the previous step was received and has been input into the system
• Do all necessary spreadsheets or calculations to determine taxable wages for fringe benefits that must be input to the payroll system for taxation or reporting. The most common type of fringe benefit in this category is the personal use of a company vehicle. Mileage logs and odometer readings may have to be collected to begin the calculations
• Verify pension plan requirements for all employees. If the company has a retirement plan (including a 401(k), 403(b) etc), the retirement plan Box on the Form W-2 must be marked for all employees as required by IRS regulations. Depending on what type or types of plans the company offers, the Box could be marked differently for different employees. The Payroll Department has to verify if they have a retirement plan, what type of plan it is, and the requirements for marking the Box prior to year-end. Rules for making the determination on marking the Box are included in the instructions for the Form W-2. Marking the Box is listed under the Form W-2 checklist
• To print the Forms W-2, create a year-end printing schedule for the MIS department or confirm schedule with outside payroll vendor
• If one does not already exist, create checklist for all tax forms that will be received or necessary for year-end. This includes all federal and state quarterly returns, federal and state annual returns, etc.
• If needed by the payroll system, order Forms W-2
• Verify that all manual checks or voids and especially reversals have been properly processed
• After the last payroll of the year, deactivate all Forms W-5 for the year
• After the last payroll of the year, close out all manual check files and logs
• After the last payroll of the year, close out all timesheet files
• After last payroll of the year, close out all spreadsheet files for the year. These might include tax files, garnishment files etc.
• Make sure that after final payroll processing for the year all files have been located and are in one place and have been closed out as listed above to prepare for Form W-2 reconciliation and processing
• Obtain company holiday schedule for new year to assist in creating a payroll calendar for the new year

Related Links

• Certified Payroll Administrator
• Paycheck Fundamentals
• Payroll Operations
• Payroll Reporting
• In-Person Payroll Seminar
• Payroll Compliance Webinars

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