As the year winds down, many small business owners are busy balancing holiday schedules, customer demands, and planning for the new year. Amid all that, year-end payroll tasks can easily fall through the cracks — yet they’re one of the most essential parts of keeping your business compliant and ready for tax season.

Year-end payroll ensures every employee’s wages, bonuses, and taxes are accurate, all reports are filed on time, and your business starts the following year with clean records. This checklist walks you through each key step, helping you simplify your process, avoid common errors, and feel confident about your payroll reporting.

1. Confirm Employee Information Is Up to Date

• Review every employee’s name, address, and SSN against your records.
• Confirm that any staff who left during the year have updated mailing addresses for tax forms.
• Verify the consistency of your payroll software or system to ensure accurate and reliable results.
• If you use contractors, make sure you have the correct taxpayer identification numbers (TINs) on file.

These details will make the W-2 and 1099 process much smoother.

2. Finalize Wages, Bonuses, and Commissions

• Record all year-end bonuses and verify that they’re properly taxed.
• Check whether any commissions or reimbursements were processed as taxable income.
• Ensure that any fringe benefits, such as gift cards or non-cash incentives, are accurately reflected in employee earnings.

This is also a good opportunity to verify that your wage reports accurately reflect the actual payments made. If you issue last-minute bonuses, make sure they’re included in the same tax year.

3. Verify Year-to-Date Payroll Totals

• Match payroll registers with your general ledger.
• Look for underpayments, duplicate entries, or missed pay periods.
• Verify that all federal, state, and local taxes were withheld and paid correctly throughout the year.

Catching discrepancies now will save time and avoid stress later.

4. Review Payroll Tax Payments and Filing Deadlines

Payroll taxes are one of the most critical compliance areas for small businesses. Make sure all your payments have been submitted and prepare for upcoming deadlines:

• Form W-2: Must be distributed to employees by January 31
• Form 941: Filed quarterly to report federal income and FICA taxes
• Form 940: Due annually for FUTA
• Form 1099-NEC: Due by January 31 for contractor payments

Review federal, state, and local payroll accounts to confirm payments are up to date. Late payments can result in penalties.

5. Prepare and Distribute W-2s and 1099s

• Confirm which workers receive W-2s (employees) and which receive 1099-NECs (contractors).
• Generate and send forms electronically or via mail.
• Review for common mistakes, such as incorrect totals, typos in names, or wrong EINs.
• Submit required copies to the IRS and state agencies.

Electronic filing helps reduce errors and speeds up the process.

6. Archive Payroll Records

The IRS recommends keeping payroll documentation for at least four years.

• Store digital and paper records securely.
• Keep access available for audits, employee requests, or state reviews.
• Include W-2 copies, Form 941/940 filings, tax deposits, and year-end summaries.

Organized records protect your business and save time later.

7. Plan for the New Year

• Review employee and contractor classifications.
• Check for minimum wage changes or new payroll regulations.
• Evaluate whether outsourcing payroll could reduce stress and improve accuracy.

A refreshed payroll process helps you start the year strong.

8. How Down to Basics Payroll Makes Year-End Easy

Handling payroll in-house can be challenging — especially with changing tax rules. Down to Basics Payroll simplifies the process for small businesses.

Here’s how we help:

• Complete year-end form preparation (W-2s, 1099s, and more)
• Error prevention through data review
• Streamlined, simple reporting
• Local, small-business-focused service and support

Partnering with a payroll provider can save time, reduce stress, and ensure everything is filed correctly.

Professional Year-End Payroll Services with Down to Basics Payroll

Closing out payroll for the year can seem overwhelming, but with a clear plan and the right support, it becomes manageable and stress-free.

Need help wrapping up payroll this year?

Contact Down to Basics Payroll and let us handle the W-2s, 1099s, and filings — so you can focus on running your business