The end of the year brings a flurry of activity for any business. For HR and finance teams, it’s also a critical time to stay compliant with labor laws and employee recordkeeping regulations. While the upcoming holidays and Q4 goals may be at the forefront of your mind, reconciling payroll before year-end is one of the best gifts you can give yourself because it prevents costly errors down the line. We’ve put together some ways to ensure you have accurate data ready for a smooth transition into the new year.
The AP-Payroll Connection
Many businesses see accounts payable (AP) and payroll as separate functions, but at year-end, they’re closely connected. Think of all the payments related to your workforce that don’t come directly from a paycheck:
- Health insurance premiums
- 401(k) contributions
- FSA or HSA funding
- Payroll taxes
These are often processed through your AP system. Payroll reconciliation means cross-referencing these payments with your payroll records to confirm everything has been paid correctly and on time. Missed or incorrect payments can create discrepancies in your general ledger and issues with benefit providers or tax agencies.
Steps for a Clean Year-End Payroll Close
The best time to reconcile payroll is early in Q4. Getting it done in October is ideal because it gives you time to catch and correct issues before the year-end crunch.
Start with a payroll audit: Did you pay all your quarterly tax liabilities? Are your insurance premiums current?
Verify employee information: Confirming details like social security numbers, addresses, and legal names avoids costly corrections or delays when issuing W-2s.
Together, these checks form the foundation for error-free year-end reporting.
Fix Mistakes Before They Cost You
Your annual reconciliation is the final verification before issuing W-2s and closing the books. This step ensures your year-to-date totals line up with quarterly 941 filings and the general ledger. Your quarterly 941 filing is like a report card for your payroll taxes; it shows the IRS what you withheld from employees, what you owe, and what you’ve already paid. For example, overpaying a tax liability or underpaying a benefit provider can throw off records and trigger regulatory trouble.
The Payoff of Reconciling Early
Reconciling in Q4 isn’t just about accuracy—it’s about avoiding surprises. By verifying details now, you can be confident W-2s will be correct, reports will align, and filings will be clean. Taking care of it before year-end gives you the chance to adjust, sidestep penalties, and start January without last-minute payroll stress.
CommPayHR: Your Year-End Payroll & HR Partner
Year-end payroll reporting doesn’t have to cause more stress than the holidays. If your team is still juggling spreadsheets, disconnected systems, or last-minute reconciliations, now is the time to rethink your approach. While it may be too late to completely overhaul your payroll process before year-end, it’s the perfect time to start a conversation with us so you can begin Q1 with clarity, confidence, and a partner who’s ready to help you grow.
Already a CommPayHR client on our Core solution plan? Now’s a great time to upgrade to the Emerging with Time plan. You’ll get easy time tracking, more employee self-service options, and extra HR support, all with the same personal service you count on. Reach out to your Customer Service and Support Specialist today to see how a quick upgrade can make next year smoother for you and your team!
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