US Year-End Payroll Activities and Tips for 2020

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Payroll Teams all across the US are fast approaching year-end payroll activities. Having a viable year-end project plan that lists specific tasks and the owners of the tasks are so important. It ensures all identified tasks are carried out and it gives accountability. This, coupled with a few other things will take the guesswork and alleviate a lot of the stress that comes with year-end activities. Now is a great time to start thinking about what reports you will utilize to reconcile W-2 box data for your employees. As we all know; the end game is to make sure we get validated W2s out the door and in the hands of our employees in a timely manner.

What follows are recommended activities that should be completed before the January timeframe.

Related: COVID-19 Stimulus Payroll Impact: What US Businesses Need to Know

A List of US Year-End Payroll Activities

Here’s a list of tasks that should be completed before December:

  • Add a message to employee payslips regarding updating the mailing address for W-2s. All employees receive some form of a payslip. This is the best way to get the message out.
  • Review 401K, Benefits, and other plans for changes
  • Gather all year-end adjustments, imputed income, and outstanding items to be cleared before the last payroll of the current year
  • Test payroll calculations and posting
  • Process income transactions for FICA withholding
  • If ADP is being used, review all exceptions on Smart Compliance
  • SAP SuccessFactors Employee Central Payroll (ECP) customers should test and implement SAP HRSPs (support packs).

Not yet an ECP Customer? Read our whitepaper on rethinking, reimagining, and redesigning payroll with SAP SuccessFactors.

Here’s what to accomplish in December:

  • If you are utilizing a vendor to handle the mailing of the W-2s; this is a great time to get a vendor in place.
  • If you are producing and mailing the W-2s in-house; it’s important to make sure the forms fit in your envelopes prior to ordering full stock.
  • Balance your Payroll Reconciliation Report with the Payroll  Journal.
  • Confirm that all imputed income for the year has been entered (automobile, cell phone, etc.).
  • Ensure to delimit the benefits for all employees on leave.
  • Run a viable claims report. Make sure to clear or resolve all outstanding items.
  • Validate holiday calendars, pay period, pay dates, provide any required configuration changes.
  • Provide new State Unemployment Insurance (SUI) rates.
  • Provide new Workers’ Compensation Benefits (WCB) rates.
  • If utilizing ADP to generate and print W-2s, review and adhere to ADP’s schedule of activities.


Wrapping up in January

If you’ve done the legwork ahead of time, then that should take some pressure off when it comes to kicking off the next year. In January, you’ll need to reconcile and balance your W-2 files. And start the prep for any possible W2Cs.

Staying on task with your year-end payroll activities will lead to less stress for you and your payroll team.

Looking for year-end payroll activities for other countries? Here are tips for: Canada | Singapore | Malaysia | UK

Want more on payroll? Check out SAPInsider’s State of the Market: Payroll and Its Impact on Cloud HR study.