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HR Managers: Use This Year-End Payroll Checklist

We’re in Q4 and that means it’s time to get your year-end payroll tasks in order. The best way to do this is to follow a checklist so you know you aren’t missing anything. We’ve put a list together for you to make it easier.

HR Managers: Use this Year-End Payroll Checklist


In order to get off to a great start next year, you need to make sure all your end-of-years tasks are handled properly. Use this payroll checklist to make sure you don’t miss any year-end tasks:


1. Double-check employee information


Sure, you gathered employee information as part of the onboarding process but that doesn’t mean it was all recorded correctly. In addition, some information may have changed. Ask each employee to verify the following information for accuracy:

  • Full legal name

  • Social Security number

  • Current address

  • Phone number and other contact information

Some errors can actually put employers at risk for penalties such as a missing or incorrect Social Security number on the W-2 form. You also want all the correct addresses on file before mailing out W-2 forms for tax season.


2. Verify that all paychecks were recorded


Go through and make sure that all paychecks were recorded for the year so far. (The final calculation will need to happen after the final pay period but it’s still a good idea to get started now). It is more common to miss paychecks that were disbursed outside of regular payroll. Don’t forget commissions, retro-pay, bonus or disability pay, and any handwritten checks. Watch out for special tax exemptions that may have happened throughout the year. If you missed any, you will want to update your records. You will also want to make sure you accurately recorded any paychecks that were voided.


3. Get benefits in order


Most businesses have open-enrollment in the fall. This is the time to allow your employees to make changes to their health benefits. Plan changes made this fall should take effect January 1, 2022.


Don’t forget to calculate flexible spending account (FSA) balances for medical costs and dependent care. Usually, any balance left in an account at the end of the year is forfeited so make sure to remind employees to use the money.


4. Calculate time-off balances


Some employees use up all their sick days, vacation pay, or paid time off (PTO) every year, while others hardly take any and end up with leftover hours. If you offer PTO, you will want to calculate the number of PTO hours used by each employee and any leftover time-off balances. You should have a policy in place about what employees can do with unused PTO – some companies allow their employees to roll it over while others offer a cash-out. Some have a “use-it-or-lose-it” policy. Whatever way you handle it, you will want to notify each employee about the number of PTO hours they have used so far and let them know their options for any remaining hours well before December. In Hawaii, employers are not required to provide employees with vacation benefits, either paid or unpaid.


If an employee decides to cash out their unused paid time off, calculate their payment and run payroll for the amount.


5. Set year-end bonuses


Decide if you are going to offer year-end bonuses and how much you will offer to each employee. Then cut the checks and make sure to record them!


6. Resolve any issues


Sometimes issues crop up that should be resolved before the end of the calendar year. For example, an employee with a voided or reversed paycheck or an employee with a payroll dispute.


7. Run the final payroll of the year


Check in advance for the final payroll date of the year so you can work around any bank holidays such as December 25, 2021.


8. Order W-2s and any other applicable tax forms


Before you know it, tax season will be here. This is the time to order your W-2s and any other tax forms you need. At the very least, employers must provide employees with end-of-year tax statements through IRS Form W-2.


*This article should be used as a starting point and is not intended to be a comprehensive list.


Partnering with Makai HR


Need help with payroll or other HR needs? We’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long and changes happen). When choosing a PEO to partner with, there are many things to consider including cost, services, and technology solutions.


With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet, or phone. We can truly improve your employees’ work benefits while freeing you up to run your business.


What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!


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