A Checklist for Closing the Year with Compliance and Confidence 

For many business owners, this time of year can be as challenging as it is rewarding. Balancing the usual end-of-year business demands with the additional responsibilities of payroll management requires careful planning and attention to detail. It’s a time when staying updated with the latest tax regulations and payroll requirements becomes crucial. Missing out on these updates can lead to compliance issues, resulting in penalties and added stress. 

2024 Payroll Changes 

  • Social Security Wage Base: The wage base for 2024 is $168,600, with a 6.2% match from both employee and employer. The maximum deduction will be $10,453.20. 
  • Medicare Tax: No limit to wages subject to the 1.45% Medicare Tax. Wages above $200,000 will incur an additional 0.9% tax. 
  • Dependent Care Limits: The maximum exclusion is $5,000 for individuals or married couples filing jointly. 
  • Health Flexible Spending Arrangements (FSA): The employee salary reduction contribution limit is $3,200. 
  • Health Savings Accounts (HSAs): Maximum contributions are $4,150 for individuals and $8,300 for families. Individuals 55 and older can make an additional $1,000 catch-up contribution. 
  • IRA Contribution Limits: $16,000 for Simple IRAs, with a $3,500 catch-up contribution for those 50 or older. 
  • 401(k), 403(b) and 457 Contribution Limits: The employee deferral limit is $23,000, with a $7,500 catch-up contribution for those 50 or older. 

Before Dec. 31 

  • Verify Company Information: Ensure all company details, including tax IDs and email addresses, are up-to-date. 
  • Verify W-2 Delivery Address: Make sure the address for sending out W-2 forms is correct. 
  • Process Bonus Payrolls: Handle any end-of-year bonuses separately for clarity. 
  • Run the Last Payroll for the Year: A significant step to close the books on the current year. 
  • Order Forms & Envelopes for W-2/1099 Processing: Stock up on necessary supplies to avoid last-minute rushes. 

Before Your First Payroll in Jan.  

  • Adjust PTO Accrual Balances: Align with your company policy and update as necessary. 
  • Update Employee Information: Reflect any changes in benefits, pay rates and deductions effective Jan. 1. 
  • Obtain New W-4 Forms (if necessary): Ensure compliance with the latest tax withholding requirements. 
  • Review ACA Requirements: Stay informed about any changes or updates. 
  • Review State Minimum Wage Changes: Adjust payroll systems to reflect any state-specific minimum wage increases. 
  • Review State Unemployment Insurance Changes: Update your records to reflect any rate changes or new regulations. 

Jan.  

  • Receive & Review Year-End Forms: Check for accuracy if an outside provider prepares these. If done in-house, ensure they are ready for distribution. 
  • Reconcile W-3 with Quarterly 941s or Annual 944: A critical step for accurate tax reporting. 

Before Jan. 31 

  • File 1099s with the Social Security Administration: Timely filing is crucial to avoid penalties. 
  • File W-2s with the Social Security Administration: Ensure all employee information is reported accurately. 
  • Distribute W-2s and 1099s to Employees & Contractors: This is a legal requirement and must be done timely. 
  • File Form 940: Report your annual Federal Unemployment Tax Act (FUTA) tax. 
  • File Form 941 or 944: These are your quarterly or annual payroll tax returns. 

Remember: If a deadline falls on a weekend, the returns or forms are due the next business day. 

Completing these tasks may feel overwhelming, but they are important for a smooth transition into the new year. Consider setting reminders for each task and delegating where possible. Your attention to these details keeps your business running smoothly. It shows your employees and contractors that you value their contributions and are committed to accuracy and timeliness in all aspects of your business operations. If you would like to discuss outsourcing your company’s payroll, contact an Adams Brown advisor.