Payroll runs in seasons. Every year, the same list of year-end actions closes out one year and helps the business roll into the next. For some businesses, this becomes a heavy project to handle while also wrapping up other annual initiatives, driving late-year sales, or planning for key hires in the year ahead. Those who are thinking proactively don’t carry this checklist alone. For them, year-end becomes a shared, well-run system within HR. A Professional Employer Organization (PEO) helps a business access an expert team that runs these processes and administrative responsibilities as a partner, rather than adding more onto someone’s plate in December. Read on to learn what you can do over the coming months, what you’ll want to pay extra attention to, and what changes are arriving on January 1, 2027. The December Checklist Start With the Data, Not the Dollars It’s late in the year, but look at this like “spring cleaning” season for your payroll system. Verify the basics like Social Security numbers, legal names, current addresses, and W-4 status for every employee. The simple things matter. Many W-2 corrections trace back to a piece of information that was unknowingly wrong in the system all year. A quick data fix now is much easier than filing a W-2c, a corrected wage and tax statement, in the spring. READ MORE: Building Payroll Systems for Compliance and Efficiency Confirm Everything That Isn’t a Regular Paycheck Supplemental benefits are a commonly missed piece of year-end payroll review. Personal use of a company vehicle, group-term life insurance coverage over $50,000, and S-Corp owner health premiums all need to be added to taxable wages before the final run, not caught afterward. Retirement and HSA/FSA contributions should be reviewed too, ideally in the window between your last payroll of the year and your first payroll of the new one. An employee who front-loaded a 401(k) contribution earlier in the year can end up exceeding a limit, and it’s important that somebody checks for concerns like these. Close Out PTO and Classification Before They Close Out in January If your handbook has a PTO payout or carryover policy, year-end is the time to calculate and communicate those additions properly. On the classification front, year-end is an opportunity to review any needed changes. If your team extends beyond traditional W-2 employees, it’s worth reviewing the classification of any 1099 contractors or other temporary staff. Misclassification can lead to state Department of Labor audits if contractors try to access benefits that are reserved for employees, like filing for unemployment insurance on their last day. Confirm Your 2027 Payroll Schedule Once next year’s pay calendar is set, check it for pay dates that land on a bank holiday. For example, New Year’s Day lands on a Friday to start 2027. Many businesses will need to consider a potential extra pay date in 2026 if they move that pay date to the last day of 2026. That can be a fix made before the first payroll of the new year, not a scramble after everyone’s already expecting a check. Your quarterly filing deadlines should follow the same schedule. For businesses with employees working in more than one state, year-end is also the time to reconcile state withholding and unemployment registrations. READ MORE: Multi-State Payroll Compliance Triggers to Know Common Year-End Mistakes That Lead to Penalties or W-2 Corrections Benefits and Bonuses Taxed Incorrectly (or Late) The same benefits that belong on the December checklist are also the most common source of a W-2c. When personal vehicle use or group-term life coverage gets added to wages after the original W-2 has already gone out, a correction needs to be made. That becomes another item on your to-do list for early 2027. Bonuses carry a similar risk: if one is issued and the FICA true-up isn’t calculated correctly the first time, catching it later means amending, not editing. The Mismatches the SSA Catches for You A name or Social Security number that doesn’t match what’s on file with the Social Security Administration (SSA) doesn’t usually surface until after filing, when a notice arrives asking for a correction. A stale address could also mean a W-2 gets mailed to the wrong place in January. The same goes for employees taxed in the wrong state. It’s an easy mistake for businesses to make when employing across state lines, and one that’s far cheaper to correct in December than to unwind after the fact. What’s Changing Effective January 1, 2027 Federal Numbers to Watch HSA contribution limits for 2027 are already official: $4,500 for self-only coverage and $9,000 for family coverage, released by the IRS in May, well ahead of the usual schedule. Health FSA limits work differently. Those arrive in the IRS’s fall inflation-adjustment notice, typically in October, so the 2027 figure isn’t final as of this writing. The same is true for 401(k) and 403(b) deferral limits and the Social Security wage base, both expected in the October-to-November window. Treat any number you see for those before then as a planning estimate, not a payroll instruction. New York Numbers to Watch New York’s minimum wage is now tied to a CPI-based formula rather than a fixed statutory step, with the state Department of Labor typically publishing the new rate in the fall. READ MORE: Fall 2026 Compliance Updates The same goes for the exempt salary threshold and the Paid Family Leave contribution rate, both set annually by state agencies on their own timeline. None of these are locked in yet, so this is the section worth a fresh check right before your December payroll runs, rather than something to finalize today. Get Ahead of the Payroll Game Before the New Year Arrives HR becomes your competitive advantage when you think proactively about the work that needs to be done and the systems that make that work possible. If you want a second set of eyes on your year-end numbers before the final payroll run of the year, Employer Services Corporation’s payroll team is here to support businesses like yours. And if 2027 has you thinking about more HR support than just processing payroll, Five Reasons More Buffalo-Area Companies Are Considering a PEO for 2027 is worth a look.