Small Business Payroll Checklist for Year-End 2021

Thoughtware Article Published: Nov 08, 2021
Someone handing a check to someone else

Small business owners have a lot on their plate including year-end payroll processing. Getting a jump on those tasks now will help make the annual payroll filing season smoother and more successful.

To help stay on top of these tasks, a payroll checklist is essential. Using a checklist each year helps you save time and meet year-end payroll requirements. Keep in mind that the exact process for your payroll is dependent on your state and industry. Use the steps below as a guide and contact your BKD advisor for further assistance. 

Start Early – Before the End of the Year

  • Verify the accuracy of your employee information. Send out a notice to employees to verify employee names, Social Security numbers, and correct employee addresses as needed. Correct any discrepancies before the end of the year. 
  • Review employee earnings, deductions, and contribution limits for accuracy. 
  • Review your payroll software for updates and compliance with Form W-2 formatting requirements. 
  • Order W-2s if printing manually.
  • Include all taxable noncash fringe benefits in the last payroll of the year. Review our BKD Thoughtware® article “Fringe Benefit Considerations for Small Businesses” for more details.

Year-End Compliance

  • Prepare a payroll bank account reconciliation to verify that payroll checks have been recorded appropriately.
  • Prepare Form 941 and applicable state reporting for the fourth quarter or Form 944 for annual filers.
  • Reconcile all Form 941s to the earnings report. 
  • Prepare Form 940. 
  • Prepare Form W-2 and Form W-3. 
  • Prepare Form 1095-C and Form 1095-B if required. 

New Year – Before Running the First Payroll of the Year

  • Update new tax rates and wage bases as applicable.
  • Update employee records for any changes/additions to benefits for the new year.
  • Verify and update the payroll tax deposit schedule as needed.

If you have additional questions or need assistance in customizing a checklist for your business, contact a BKD Trusted Advisor™ or submit the Contact Us form below.  

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