How to Prepare Your Small Business for Year-End Payroll Reporting

As the year winds down, it’s time for small business owners to tackle one of the most critical tasks on the payroll calendar: year-end payroll reporting. This process is essential for maintaining compliance with federal, state, and local tax agencies and ensuring a smooth transition into the new year.
Here’s a step-by-step guide to help your small business prepare for year-end payroll reporting and avoid common pitfalls:

1. Verify Employee and Contractor Information:
Accurate employee and contractor information is crucial for generating correct year-end forms like W-2s and 1099s.

• Check personal details: Ensure names, Social Security Numbers (SSNs), and addresses are correct.
• Update changes: Confirm any changes in filing status or exemptions reported during the year.
• Review contractor info: Make sure you have accurate Taxpayer Identification Numbers (TINs) and payment records for 1099 recipients.

​2. Reconcile Payroll Records: 
Reconciliation helps identify discrepancies before they become costly errors.

• Review pay runs: Compare year-to-date totals for wages, taxes, and deductions against your payroll system’s records.
• Check tax payments: Confirm that all federal, state, and local tax payments match your liabilities.

3. Account for Fringe Benefits, 401(k), and Health Insurance: 
Some benefits and reimbursements provided during the year may need to be included in taxable wages. Examples include:

• Fringe benefits: Company cars, group-term life insurance exceeding $50,000, bonuses, gifts, and other non-cash benefits.
• 401(k) contributions: Ensure all contributions for the year have been reported in payroll.
• Health insurance for 2% shareholders: If you’re an S-Corp, remember to report health insurance premiums for 2% shareholders as taxable wages on their W-2s.

​4. Prepare Year-End Forms:
By January 31, you’ll need to distribute and file key forms:

• W-2s for employees
• 1099-NECs for contractors
• Form 940 for FUTA taxes
• Other state-specific forms, if applicable

Your payroll provider can assist with generating and filing these forms accurately and on time.

5. Review FUTA Credit Reduction Impacts:
For 2024, employers in California, New York, and the Virgin Islands are subject to a FUTA credit reduction. If you operate in these areas, be sure to account for the increased tax liability.

6. Plan for Deadlines and Set Reminders:
Missing payroll tax deadlines can result in penalties, so it’s crucial to stay organized:

• December 31: Last day to process payroll for 2024.
• January 31: Deadline for W-2s and 1099s.
• February 15: Submission deadline for updated W-4s (if applicable).
• Tax deposit due dates: Double-check your federal and state schedules.

7. Partner with a Trusted Payroll Provider:
Navigating year-end payroll reporting can be complex, but you don’t have to do it alone. At SwiftChecks, we ensure all year-end forms are prepared, filed, and distributed accurately. Our system automatically calculates tax liabilities, files forms electronically, and keeps you compliant every step of the way.

Get Ready for a Stress-Free Year-End:
​By starting early and leveraging the right tools and expertise, you can close the year with confidence and start 2025 on solid footing. Need help with year-end payroll reporting? Contact SwiftChecks at [email protected] or schedule a demo here.