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Checklist, Frequent Reconciliations Key to Smooth Year-End

May 20, 2022, 8:41 PM

A successful year-end requires a detailed strategy carried out over the entire year, payroll professionals said May 12 at the American Payroll Association’s 40th Payroll Congress.

Having a year-end planning committee is crucial, said Karen Davidson, assistant director for the City of Houston.

Human resources, accounts payable, the benefits department, IT, and legal counsel should be involved. Additionally, ensure that the mailroom is included so they can be prepared to mail Forms W-2 and other year-end documents, Davidson said.

After forming the year-end committee, create a year-end calendar and checklist that includes target dates, the person responsible for each task, and planned absences, Davidson said. That way, if a team member is absent, it is easy to identify what work might need to be assigned to someone else until they return, she said.

Make sure that the notes on your checklist are detailed enough that they do not take additional time to interpret -- the more robust the better, Davidson said. The calendar should also include system upgrades and releases, as those are critical, she said.

Take time to review your pay calendar for the upcoming year, and notify management and finance if there are 27 biweekly pay periods or 53 weekly pay periods, Davidson said.

Communicate changing wage bases and tax rates with employees, when relevant, to reduce the volume of emails from confused employees, said Sally Hilton, the APA’s director of payroll training. In particular, alert higher-earning employees that their net pay will decrease at the start of the year because a new Social Security wage base will take effect, she said.

After wrapping up year-end, discuss and document “pain points” with the committee to avoid making similar mistakes next year, Davidson said.

Year-End Year Round

There are steps that the payroll department can take outside of the peak year-end processing period for a smoother year-end overall, Davidson and Hilton said.

Consider doing a mock run of Forms W-2 midway through the fiscal year to catch any errors before year-end, Davidson said.

She also recommended reconciling every pay period, if possible. “It will make it very easy for you during year-end,” she said.

The amounts of wages subject to federal income tax, Social Security, and Medicare on Forms 941 need to match the totals on Forms W-2, Hilton said. Keep running totals of all earnings and deductions in a detailed spreadsheet. “Don’t wait until the end of the year, folks—do this each and every payroll, and certainly each and every quarter,” she said.

Ideally, you should treat every payroll as something that will impact year-end, Hilton said. “It all ties together.”

To contact the reporter on this story: Jazlyn Williams in Washington at

To contact the editor responsible for this story: William Dunn at