5 Tips for Closing Payroll for the Year

If you're struggling to wrap your head around closing payroll for the year, you're not alone. 

Year-end payroll to-dos can feel confusing because of tax laws, deadlines, and the need to tie up loose ends. Oh, and it's the holiday season too, so you, like everyone else, are probably feeling the pains of being extra busy right now. Luckily, we believe that payroll should be quick and easy, and we're here to help you jump on board with that philosophy that too. 

When you cross payroll items off your year-end to-do list, you're steering clear of potential, and unexpected, tax liabilities. When a business gets caught off guard by a huge IRS bill, it could wreak havoc on its finances, and no one wants that.

And, as we mentioned, payroll laws can get pretty complicated. If you decide to phone a friend with an SOS, you know where to find us.

So, where do you begin with year-end payroll?

We'll cover the five most essential areas to pay close attention to when you close out your company's payroll for the year. These tips will help you understand what you can do in a short amount of time and the key questions to ask your finance team if you decide to bring on support with the whole payroll thing. 

Throughout the year, you must have accurate data, a simple workflow, and smooth tax filings when it comes to your payroll throughout the year. These three things guarantee a smooth and painless payroll process every time. And, when year-end rolls around, that closing payroll checklist will come and go with ease. Ah, the dream, right? It's possible.

Here are five tips for closing payroll for the year, along with key questions to ask:

1. Know the reporting and tax deposit due dates. Your payroll is a process that continues throughout the year. It's essential to keep records easily accessible to refer to them when you file your year-end forms. For forms like W-2s, W-3s, and 1099-NEC's, 940s, 944s, to name a few—you'll need to have those electronically filed with the IRS by January 31st each year. There are other forms due on and around that time. You can view the complete list here.

Key questions: Which payroll tax forms do I file each year? When are they due? 

2. Confirm employee information. Ensure that information for each employee is correct. For example, an employee may have moved within the year and not yet updated their address. You'll need to have the following information on file:

• Employee's full name
• Accurate tax information, such as social security number
• Home and Email Address
• Phone number

Key question: How can I collect employee information digitally and securely?

3. Verify payroll numbers. Before you send tax forms to the IRS, you want to ensure that all wages, taxes, and benefits paid match with the numbers in your accounting system. If you use accounting software, you can pull up that information quickly in a Profit & Loss statement.

Key question: What's the best way to reconcile the payroll data on my tax forms with the payroll data in my accounting software?

4. Check for new tax rates. Each year, you'll receive a tax rate notice from your state's Department of Labor and Employment. Your payroll software must have your new rate to calculate and pay correct tax payments. 

Key question: When can I expect to receive the annual notice for unemployment Insurance tax rates from my state?

5. Payout employee bonus checks. If you plan on paying employees a bonus for a job well done, you must make those payments with the last paycheck of the year. So don't pay bonuses in a pay cycle that runs into the next year since that would be considered the new year's income. The date on an employee's paycheck determines the year the gross pay is taxable—regardless of when the work took place.

Key question: What's the best way to include a bonus for my employees in the last paycheck of the year?

If you're running payroll manually now, it's an ideal time to consider switching to software like Symply. Year-end sure feels a lot different when payroll is in the hands of an expert team that you can rely on year after year—leaving it to us leaves you time to enjoy your holidays (instead of crunching numbers).

Featured resource: How to Switch Payroll Providers

Symply is trusted by major brands that care about payroll and their employees as much as you do. Don't just take our word for it. See for yourself right here.

Do you know business owners struggling with payroll? Let's help them together. Share this article and help make their year-end smoother, so they have more time to enjoy the holiday season right along with you.