Key takeaways
Year-end processes are complex, and it's easy to miss something important or encounter issues.
For new payroll professionals who have not completed a year-end cycle, guidance is critical.
Continued shifts in remote and hybrid work make accuracy around taxation challenging.
Every year, organizations face the crucial task of completing year-end payroll processes. Especially if various changes and challenges have occurred over the year—such as a merger, changes in third-party vendors, a switch to a new human capital management system or an increase in remote-work employees—starting early on year-end tasks can save your organization significant time and stress. With these tips from RSM's payroll advisors, you can streamline your year-end checklist and avoid common pitfalls.
Why early preparation for year-end payroll is crucial
Beginning your year-end payroll tasks early allows you to identify and correct potential issues before they become major problems. Common issues, such as incorrectly calculated taxable benefits, can lead to wage and tax adjustments. Addressing these issues early can prevent the need to issue corrected W-2s, T4s, or RL-1s and amended returns. This proactive approach ensures that your employee and business payroll tax forms are accurate and on time.
Moreover, a well-managed year-end process demonstrates your organization's commitment to your employees' financial wellbeing. Accurate and timely pay and benefits not only boost employee morale but also safeguard your company's reputation as an employer of choice.
Understanding the impact of organizational changes on year-end payroll
If your organization has experienced significant changes—such as an acquisition, merger, new remote work policies or a switch to a new HCM system—understanding how they may influence your year-end payroll process is crucial. These changes can affect data accuracy, tax compliance and payroll processing if not handled correctly. Early preparation helps maintain compliance, particularly with new payroll-related regulations.
By engaging with payroll advisors early, you can minimize errors and maintain compliance throughout the year-end process. This proactive approach ensures that all necessary adjustments are made well before the deadline, allowing for a smoother and more efficient year-end closing.
Ensuring data accuracy and compliance for year-end payroll
Accurate employee data is essential for compliant year-end payroll processing. Ensure that the first three quarters are reconciled and tax-balanced before tackling the fourth quarter. Encourage employees to review their pay stubs for accuracy. Double-check all employee information, including address changes and remote work locations, to prevent tax implications and ensure data accuracy.
Planning for the new year: Using year-end insights for future success
Year-end payroll processing is about not only closing out the current year but also setting the stage for the coming year. By starting early, you gain valuable insights into your organization's financial performance, which can inform data-driven decisions and help set realistic goals for the future.
Getting help with your year-end payroll checklist
A qualified payroll consultant can provide critical guidance during year-end planning, enhancing the accuracy and efficiency of your processes and establishing a strong foundation for the next year.
RSM's team of seasoned, certified payroll professionals offers accurate, compliant and reliable payroll services. We help businesses manage complex year-end issues, payroll continuity, tax compliance, and payroll outsourcing.
Connect with an RSM consultant today to help ensure a successful year-end and a strong start to the new year.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
