Essential Year-End Compliance & Payroll Checklist
As we move into the final stretch of the year, December brings a familiar mix of celebrations, time off, and last-minute administrative tasks that can easily catch business owners off guard. If you’re managing HR on your own or you’re the CEO/Founder wearing several hats at once, this year-end checklist is designed to help you stay ahead of the most important HR, payroll, and compliance items before January arrives.
At GrowthLab, we help founders and operators simplify the year-end crush with financial operations, HR support, payroll oversight, and compliance structure.
December Readiness Checklist
(With guidance on what to review — and why it matters.)
1. Final Payroll Runs of the Year
December
payroll requires extra attention because banks, payroll providers, and the IRS treat year-end runs differently. Here’s what to look for:
What to check
- Holiday-adjusted payroll deadlines:
Banks close early or completely on federal holidays (Christmas Eve, Christmas Day, New Year’s Day). This means payroll may need to be submitted 1–3 days earlier than usual. Look for notices from your payroll provider alerting you to earlier submission deadlines.
- Bonus timing and tax handling:
Decide whether bonuses will be taxed as regular wages or supplemental wages.
- Employee addresses: W-2s are mailed or made available electronically based on what’s in payroll. Wrong addresses = lost W-2s = frustrated employees = avoidable reprints.
- Encourage employees to elect electronic W-2 delivery:
If your payroll system offers electronic delivery (most do), now is the perfect time to remind your team to opt in.
- Manual/off-cycle payments: Make sure any handwritten checks, reimbursements, or late payments are added to payroll so they appear on the W-2.
Why this matters
Missing holiday deadlines can delay paychecks, create compliance issues, or cause errors in tax reporting — and these issues are significantly harder to fix in January when systems lock down and agencies hit peak volume.
2. PTO & Sick Time Balance Reviews
December brings heavy PTO usage plus state-specific carryover rules.
What to check
- Are balances accurate? Look for negatives, unapproved time, or missing entries.
- What does your policy allow? Carryover, caps, payouts, or “use it or lose it" rules.
- Have you told employees what happens on December 31?
Why this matters
Incorrect balances and unclear rules create disputes — and those disputes always surface in January.
3. Health, Dental & Vision: January 1 Updates
Most benefit plans renew January 1. Payroll and insurance systems must match exactly.
What to check
- Were all Open Enrollment elections entered?
- Are new rates updated in payroll?
- Did anyone waive coverage?
- Have you communicated plan changes?
Why this matters
Mismatched payroll deductions can cause canceled coverage or mis-billing — and fixing it later takes months.
4. January 1 Compliance Updates
Many labor laws refresh on the first day of the year. Prep must happen in December.
What to check
- Minimum wage increases (varies by state).
- Updated exempt salary thresholds.
- Tax tables and unemployment rate changes.
- Labor law posters (including digital distribution for remote teams).
- Required annual training in states like CA, CT, IL, ME, NY.
Why this matters
Missing a January 1 update means you’re out of compliance on day one.
5. Fringe Benefit Reporting
Certain benefits count as taxable income and must be added to the W-2.
What to check
- Group-term life insurance (over $50k)
- Company vehicle usage
- S-Corp owner medical premiums
- HSA/FSA/commuter benefit totals
Why this matters
Incorrect W-2s can trigger amendments, IRS notices, and unhappy employees.
6. Employee Handbook Updates
December is the right time to update your employee handbook.
What to check
- Policies impacted by new state laws
- Outdated systems, tools, or processes
- Remote work rules
- Leave policies
- State-specific addenda
Why this matters
Your handbook is a compliance document — if it doesn’t reflect how you operate, it becomes a liability.
7. Employee File & HRIS Clean-Up
A simple but high-value year-end task.
What to check
- Emergency contacts
- I-9 reverifications
- Address changes
- Dependent and benefit accuracy
- Payroll profiles (titles, rates, withholdings)
Why this matters
January is chaotic enough — starting with accurate data makes everything smoother.
Final Thoughts
Year-end doesn’t have to feel like a scramble. A little planning in December can prevent costly payroll errors, compliance issues, and employee frustration in January. By reviewing these items now, you set your business up to start 2025 organized, compliant, and confident.
If you’re feeling stretched or unsure whether everything is covered, GrowthLab helps founders streamline payroll, HR, and compliance so nothing slips through the cracks during the busiest time of year.
Frequently Asked Questions
When should we run our final payroll of the year?
Final payroll timing depends on bank holidays and your payroll provider’s cutoff dates. In most cases, payroll must be submitted 1–3 business days earlier than usual in December. Always confirm deadlines with your provider to avoid delayed paychecks.
Do bonuses have to be paid before December 31?
Bonuses are reported in the year they are paid, not earned. If you want bonuses included on the 2025 W-2, they must be paid by December 31. If paid in January, they’ll be reported in the following tax year.
What happens if PTO balances are wrong at year-end?
Incorrect PTO balances can lead to payroll disputes, compliance issues, or overpayments—especially in states with payout or carryover requirements. Fixing these issues in January is far more time-consuming than addressing them in December.
Why do benefits need to be updated before January 1?
Most benefit plans reset on January 1. If payroll deductions don’t match insurance elections or rates, employees may lose coverage or be billed incorrectly. These errors can take months to resolve with carriers.
Is an employee handbook really required?
While not legally required in every state, an up-to-date handbook is one of the strongest compliance tools a business can have. Outdated or inaccurate policies increase legal risk—especially as labor laws change each year.
Related Blogs:
