Payroll & Compliance

Year-End Payroll Checklist for Small Business

The deadlines all land in January — but the failures are built in October. A dated checklist for US employers, verified against IRS and SSA guidance.

Ram Singh · Published August 25, 2026

Everything with a hard federal deadline lands in January — W‑2s, 1099‑NECs, Form 940 and the fourth‑quarter 941 are all due January 31. But almost every January failure is created earlier: a missing W‑9, an unrecorded fringe benefit, a name that does not match the SSN on file. The checklist below is ordered the way the work actually has to happen — verification in the fall, taxable adjustments before the final December payroll, filing in January.

The deadlines, in one place

Per the IRS Employment tax due dates guidance (page last reviewed 21 April 2026), these are the dates a US employer is working against:

January 31 — Forms W‑2 with Form W‑3 filed with the Social Security Administration (not the IRS), and W‑2 copies furnished to employees.
January 31 — Form 1099‑NEC filed with the IRS and provided to recipients, with Form 1096 if filing on paper.
January 31 — Form 940 (FUTA), Form 941 for the fourth quarter, and Forms 943, 944 and 945 where they apply.
Last day of February — other information returns filed on paper; March 31 if you file them electronically.

Two provisions are worth knowing because they buy you real time. First, if you deposited all taxes when due, you get 10 additional calendar days to file Forms 940, 941 and 945 — a genuine grace period, but only for the return, never for the deposit. Second, when a due date falls on a Saturday, Sunday or legal holiday, it moves to the next business day. Neither applies to W‑2s or 1099‑NECs: those have no automatic extension at all.

October and November: verify before anything is printed

Reprinting a W‑2 is cheap; filing a corrected one is not. Three checks close most of that risk:

Names and SSNs against the actual card. A mismatch between the name in payroll and the name SSA holds causes the W‑2 to reject or post to the wrong earnings record. Nicknames, post‑marriage name changes and hyphenated surnames are the usual culprits.
Addresses. Ask every employee to confirm their mailing address in writing before the December run — including anyone who left mid‑year, since they still get a W‑2.
A signed W‑9 for every contractor you paid. Chasing a TIN in January, after the vendor has stopped answering, is how 1099 penalties happen. Ask now, while you still have an unpaid invoice as leverage.

Check the e‑file threshold — it is lower than most owners think

This is the single most commonly missed rule for small employers. If you file 10 or more information returns, you must file them electronically. The threshold is not per form type: the IRS requires you to combine almost all information return types — the Form 1099 series, Form 1042‑S and Forms W‑2 filed with SSA — to decide whether you have crossed it.

So an employer with six W‑2s and five 1099‑NECs has eleven returns and is an electronic filer, even though neither number reaches ten on its own. Discover that in late January and you are registering for filing credentials under deadline pressure. Discover it in November and it is a half‑hour task.

December: run the taxable items through payroll before the last check

Certain benefits are taxable wages that never touched a paycheck during the year. They have to be added to payroll so they land on the W‑2 and the withholding is calculated — and that has to happen before the final payroll of the year, because after it you are amending rather than adjusting. The recurring four:

Personal use of a company vehicle — the personal‑mileage portion is a taxable fringe benefit.
Group‑term life insurance above $50,000 in coverage — the excess carries imputed income.
Health insurance premiums for S‑corporation shareholders owning more than 2% — reportable as wages on the shareholder’s W‑2.
Gift cards and cash equivalents. There is no de minimis exclusion for cash or cash‑equivalent gifts, whatever the amount. A $25 gift card is taxable wages.

Reset your deposit schedule for the new year

Your deposit frequency is not permanent. The IRS is explicit that before the beginning of each calendar year you must determine which of the two schedules — monthly or semi‑weekly — you are required to use, based on the tax you reported during the applicable lookback period. Payroll that grew during the year can push a monthly depositor into semi‑weekly status on January 1, and missing that produces failure‑to‑deposit penalties on payrolls that felt entirely routine.

The mechanics, straight from the IRS:

Monthly depositor: deposit taxes on payments made during a month by the 15th day of the following month.
Semi‑weekly depositor: for payments made Wednesday, Thursday or Friday, deposit by the following Wednesday; for payments made Saturday through Tuesday, by the following Friday.
Next‑day rule: accumulate $100,000 or more in taxes on any day and you must deposit by the next business day — this overrides whichever schedule you are on. A single large bonus run can trigger it.
FUTA: a quarterly liability of $500 or less carries forward to the next quarter. At $500 or more, deposit by the last day of the month following the quarter. If the fourth‑quarter figure is $500 or less, you may simply pay it with Form 940 by January 31.

All federal tax deposits must be made by electronic funds transfer.

Reconcile the four quarters against the W‑3

Before anything is transmitted, prove the year ties out. Total wages and withholding across your four Forms 941 should agree with Form W‑3, which should agree with payroll expense in the general ledger. Where they disagree, the cause is almost always a manual check written outside payroll, a voided payroll that was never reversed, or a December fringe adjustment posted after the 941 went out.

Two figures to confirm while you are in there. The Social Security wage base for 2026 is $184,500, taxed at 6.2% on employer and employee alike — a maximum of $11,439.00 each. Any employee who crossed that ceiling should show Social Security wages capped at it, while Medicare wages, which have no ceiling, keep running at 1.45% each side. Separately, Additional Medicare Tax of 0.9% applies to wages above $200,000 in a calendar year, withheld from the pay period in which you cross that figure onward, with no employer match.

One timing note worth flagging, because it is the reason to do this in two passes rather than one: the 2027 wage base does not exist yet. SSA announces it each October alongside the cost‑of‑living adjustment, so a January payroll configured in November is running on an assumption. Confirm the figure before the first payroll of the new year rather than after it.

The first week of January

Collect fresh Forms W‑4 from anyone who claimed exempt from withholding — that election expires and has to be re‑filed annually. Load the new wage base and any state unemployment rate change into your payroll system; state agencies generally mail those rate notices in December. Then confirm the classification on file for every worker, because January is the month a misclassification stops being an internal question and becomes a filed document. Where those calls are genuinely close, our breakdown of 1099 versus W‑2 status walks the tests, and 1099 filing deadlines and penalties covers what getting it wrong actually costs.

Thresholds move. Every figure above was verified against IRS and SSA primary documentation in August 2026 — re‑check current guidance before filing, and confirm anything unusual with your CPA. We are bookkeepers, not tax counsel.

If year‑end is landing on someone who already has a full‑time job, that is the signal to hand it off. Our small business payroll service and outsourced payroll both include the year‑end filings, and where the books must be right before payroll can be, catch‑up bookkeeping comes first.

Questions, considered

Quick answers.

When are W-2s and 1099-NECs due for the 2026 tax year?

Both are due January 31, 2027. Forms W-2 go to the Social Security Administration with Form W-3, Forms 1099-NEC go to the IRS, and copies must reach employees and recipients by that same date. Neither has an automatic extension.

Do I have to file W-2s and 1099s electronically?

If you file 10 or more information returns in total, yes. The IRS combines almost all types to test the threshold — the Form 1099 series, Form 1042-S and Forms W-2 filed with SSA — so six W-2s plus five 1099-NECs is eleven returns and triggers the requirement.

What is the Social Security wage base for 2026?

$184,500. It is taxed at 6.2% on the employer and 6.2% on the employee, a maximum of $11,439.00 each. Medicare has no wage ceiling. SSA announces the following year's base each October, so confirm the 2027 figure before your first January payroll.

When do I need to change my payroll tax deposit schedule?

Before the beginning of each calendar year. Your lookback period determines whether you are a monthly or semi-weekly depositor, and payroll growth during the year can move you between them. Separately, accumulating $100,000 or more in taxes on any single day requires a next-business-day deposit regardless of schedule.