End-of-Year HR and Payroll Checklist for Employers (2025 Edition)
- Corporate Outsource Solutions
- Oct 9
- 3 min read
As 2025 draws to a close, it’s the perfect time for business owners and HR leaders to get ahead of year-end responsibilities. The final quarter can be hectic, but wrapping up your HR and payroll tasks early can prevent costly errors, ensure compliance, and set your business up for a smooth start in 2026.
At Corporate Outsource Solutions, we specialize in helping companies simplify HR, payroll, and compliance — especially during high-stakes periods like year-end. Use our updated 2025 End-of-Year HR and Payroll Checklist to stay on track.
1. Review All Employee Information
Before issuing W-2s and 1099s, verify that employee records are accurate and complete.
Full legal names
Social Security numbers
Current addresses
Correct tax withholding elections (W-4)
Direct deposit details
Tip: Even one incorrect SSN can cause IRS rejections or penalties. If you’re using a PEO, this is typically handled for you — another reason outsourcing saves time and risk.
2. Reconcile Year-to-Date Payroll Data
Ensure that your payroll totals match across all systems and reports.
Gross wages, bonuses, and overtime
Taxable fringe benefits (e.g., group-term life insurance, gift cards)
Retirement contributions and employer matches
FICA, FUTA, SUTA tax amounts
Any discrepancies should be resolved before the final payroll run of the year.
3. Process Year-End Bonuses and Gifts Correctly
Planning to reward your team with a holiday bonus or gift?
Cash bonuses must be included in taxable wages.
Non-cash gifts may also be taxable depending on value.
Consider "grossing up" bonuses so employees receive the intended amount after taxes.
Tip: If you’re a PEO client, we can help you plan and process year-end bonuses efficiently and in compliance with IRS rules.
4. Prepare for W-2 and 1099 Filings
Employers must distribute:
Form W-2 to employees by January 31, 2026
Form 1099-NEC to contractors by January 31, 2026
Make sure you:
Have updated addresses for all recipients
Verify contractor classifications (to avoid misclassification penalties)
Submit electronic copies to the IRS and SSA if required
5. Review Benefit Contributions and Limits
Check benefit deductions for compliance with IRS contribution limits, especially for:
401(k) plans
Health Savings Accounts (HSAs)
Flexible Spending Accounts (FSAs)
If an employee exceeded a limit (or under-contributed), it’s better to fix it now than in the middle of next year’s tax season.
6. Update Employee Handbook and HR Policies
The end of the year is an ideal time to revise your:
Employee handbook
PTO policies
Remote work guidelines
Pay practices
Termination procedures
Ensure your policies reflect new regulations for 2026, including changes to labor laws, state-specific mandates, or federal updates (such as the Tipped Occupation Code System).
7. Plan for 2026 Compliance
Use this time to:
Audit your employee classification (W-2 vs. 1099)
Confirm minimum wage changes by state or city
Prepare for any updated ACA or OSHA reporting requirements
Identify HR or payroll processes to automate or outsource
8. Meet with Your PEO or HR Provider
If you work with a PEO like Corporate Outsource Solutions, now is the time to:
Review your year-end reporting plan
Schedule W-2/1099 distribution timelines
Ask about updates to tax codes or labor laws
Get help forecasting HR needs for 2026
If you're not currently using a PEO, this is a great time to explore how outsourcing HR can save you time, reduce compliance risks, and offer better benefits to your team.
Final Thoughts
The end of the year shouldn’t be a scramble. With the right systems (and the right partner), you can confidently close the books on 2025 and start 2026 on solid footing.
Need help getting your HR and payroll processes ready for year-end? Let’s take it off your plate.
Contact Corporate Outsource Solutions today to learn how we can handle your year-end compliance, payroll, and reporting — so you can focus on your business.
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