As 2022 comes to a close, accurately updating your company’s payroll processes should be at the top of the to-do list. Our recent webinar covered the best tips and tricks for completing the process, along with a detailed checklist outlining each necessary step.
Below, we lay out a convenient strategy to help ensure this year-end payroll season is a breeze:
Be sure to cover each “do” of payroll year-end. The functional areas to closely monitor are: IT, benefits, compensation and finance. It’s helpful, if the organization has the capacity, to form internal year-end teams in each of these areas so work can be allocated and addressed as needed. Create a project plan that outlines dates, responsibilities and requirements for internal team members to reference. Further, contact external vendors to coordinate provisions of data utilized in year-end entries.
When preparing the payroll year-end calendar, include scheduled pay dates, adjustment runs, holidays and deadlines. Communicate year-end impacts to employees, such as IRS updates, W-2 distribution schedules and the deadline to update personal information. Finally, test your year-end system updates for both accuracy and functionality.
Review the “don’t forgets” of payroll year-end. Don’t forget to include bank holidays in your payroll year-end schedule, as these can impact deadlines, pay dates and related processes. Also remember to include year-end cutover activities from the current year into the new year. Validate W-2 boxes for retirement, coded boxes for accuracy and process all manual and voided checks. These simple steps can often go overlooked, so it’s important to remember to include them at this critical time of review.
Keep this checklist handy. Our carefully crafted year-end payroll process checklist can help identify responsible team members and primary contacts for each line item, ensuring efficient communication is had throughout the process and that each step gets completed. When finalizing your payroll year-end, there are also several factors that can affect this process. Be sure to take these circumstances into consideration:
- 2023 unemployment wage base updates: check for any changes to published unemployment wage bases, which typically become effective on January 1, 2023; verify agency-assigned tax rates and provide these to internal teams, partners and vendors as needed
- Technology concerns: for hosted applications, ensure that year-end and new year software releases are applied timely; validate and test software updates; and assess the potential need to reapply customizations after an update. For vendor-hosted applications, the vendor is responsible for applying year-end and new year software releases; review and document all vendor-published release notes; validate application of applied updates; and document testing results
- Aftermath of COVID-19 & CARES Act: changes stemming from government and tax regulations, as a result of the pandemic, play a role in your year-end planning. It’s important to note that student loan garnishments are on hold until the new year, but some debt may have been canceled as of August 24, 2022; another component of the pandemic was a significant uptick in remote work – it’s crucial to understand how this impacts global payroll and tax to prevent violations concerning remote work; be aware of complications regarding workplace dynamics with office closures under governmental mandates compared to employer-enforced closures
For help with year-end payroll processes or for necessary human capital management tools to prepare you for 2023, please contact our team of professionals:
About our authors
Neil Verma
Neil Verma is a managing director on Sikich’s human capital management and payroll consulting team. His expertise includes global payroll and HCM process and systems implementations, HR and payroll process and compliance, and qualified and nonqualified deferred compensation.
Rachel Saunders
Rachel Saunders is a managing director on Sikich’s human capital management and payroll consulting team. Rachel has an in-depth understanding of human capital management technology, payroll solutions and business process development. She helps clients with vendor evaluation and selection, change management, internal controls and more.
