As the end of the year approaches, businesses are juggling numerous tasks to close out 2024 effectively and seamlessly, in preparation for 2025. This year-end checklist will help you identify critical responsibilities, from verifying employee data to distributing tax forms, so you can start 2025 prepared for the year ahead.
1. Note Important Dates and Deadlines
Staying organized is key during this busy season. Mark your calendar with essential dates to avoid scrambling at the last minutes:
Pay bonuses: If bonuses are part of your employee compensation, process these payments in December for a smooth payroll run.
Form submissions and adjustments: Ensure all payroll adjustments are made before January 2, 2025, to avoid compliance issues and maintain accurate records for 2024.
By handling these tasks promptly, your business can ensure everything is in order before the holiday rush and the end-of-year payroll deadline.
2. Prepare Final Payroll
Closing out payroll accurately is critical to avoid any complications in tax reporting and employee satisfaction. Some steps to consider:
Process bonuses separately: This helps optimize tax efficiency and ensures bonuses are taxed correctly.
Finalize payroll adjustments: Confirm that all payroll items, including deductions and contributions, are up to date before the last payroll cycle of the year.
Organizing these tasks now will help your business close EOY payroll smoothly and reduce the need for corrective actions in 2025.
3. Validate Employee Personal and Contact Information
To avoid delays or errors in document distribution, ask employees to verify their personal information:
Update contact details: Send a reminder for employees to update addresses, phone numbers, and emails in your HR system.
Ensure accurate records: Updated records help employees receive important documents on time and ensure accurate tax reporting.
This step is particularly important for remote and hybrid employees who may have relocated during the year.
4. Check Tax Rates and Wage Bases
With tax season around the corner, a review of your tax rates and wage bases is essential:
Social Security and unemployment limits: Verify that your HR and payroll systems reflect the latest thresholds for Social Security, unemployment, and other tax programs.
Update state and local tax rates: These can change annually, so it’s important to apply any updates to avoid incorrect deductions.
Correctly updating these figures will help your business avoid compliance headaches and ensure payroll accuracy.
5. Review Benefits and Prepare for Open Enrollment
Year-end is a good time to evaluate your employee benefits offerings:
Assess current plans: Review your health, dental, and retirement benefits to ensure they meet employee needs and budget constraints.
Prepare open enrollment materials: Employees appreciate transparency, so include details about any benefit changes and deadlines.
Review ACA compliance: For companies with 50+ full-time employees, ensure you’re meeting Affordable Care Act requirements for 2025.
Taking these steps will help employees make informed decisions about their benefits for the upcoming year.
6. Update Employee Handbook and Policies
Policies can evolve, and the start of the year is the perfect time to roll out updates. Focus on:
Policy revisions and State/Federal Law Updates: Adjust your handbook to reflect changes in company policies, health guidelines, legal requirements, as well as any changes to State and/or Federal employment laws.
Distribute via internal tools: Email or post the handbook on your company’s intranet to ensure employees have access to the most current version.
An updated handbook is a valuable tool to keep employees informed about their rights, benefits, and expectations.
7. Prepare Communication Plans
Transparent communication goes a long way in ensuring that employees are prepared for EOY tasks. Key items to include:
How to access EOY documents: Share instructions on accessing Form W-2s, 1099s, and other tax forms.
Promote paperless options: Highlight the convenience and eco-friendliness of going paperless for document access.
Clear communication can help reduce employee questions and streamline distribution efforts.
8. Distribute Tax Forms (If Not Paperless)
If your employees have opted for physical tax forms, distribute them no later than January 31, 2025:
Form W-2s and 1099s: Send out these essential tax documents by the deadline to comply with IRS regulations.
Electronic access: For employees who have chosen paperless, confirm they have instructions for accessing their documents online.
Being prompt with these forms will help employees complete their taxes efficiently and avoid inquiries down the road.
9. Review Compliance Requirements
Maintaining compliance with federal and state labor laws is essential. Now is the time to audit your processes:
Timekeeping and payroll systems: Confirm that your systems meet Department of Labor and Fair Labor Standards Act standards.
Update for new laws: If there are recent changes to wage and hour laws, ensure that your policies and payroll system reflect these updates.
Regular compliance checks can help your organization avoid fines and maintain a positive work environment.
10. Evaluate Your Year-End Program and Ask for Feedback
Once the year-end process wraps up, gather feedback to identify areas for improvement:
Employee and stakeholder surveys: Ask for feedback to learn what went smoothly and what could be better next year.
Review metrics: Assess response rates, feedback from communication efforts, and error reports to understand your process’s strengths and areas for adjustment.
A proactive review will set your business up for an even smoother year-end process in 2025.
Wrapping Up the Year with Confidence
Completing these steps will help your business transition smoothly into the new year, maintain compliance, and support employees effectively. By staying proactive and organized, you can reduce last-minute stress and set the stage for a successful 2025. Be sure to reach out to the East Bay HR Pros team for assistance with your End Of Year and other HR needs.
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