Payroll Year End

Have you paid employees by manual checks outside of payroll? You must record those manual checks on payroll to ensure that all wages are legal. Further, third party sick pay, personal use of an employer-provided vehicle, qualified moving expenses, club memberships and more must be reported on W2s!

Third party sick pay is an insurance benefit often called short or long-term disability insurance. If an employee has used this benefit during the year, you will likely need to report taxes and wages through payroll. While these payments are not made through the employer, the taxes must be reported by the employer. Your disability insurance provider will send you quarterly statements.

A fringe benefit is any form of payment for performance of services. Generally, these are things like gift cards, employee gifts, personal use of a company car, gym memberships, etc. These are considered taxable wages and must be reported on an employee’s W-2.

Please carefully review your final payroll of the year. There are several items to review:

• Employee names, addresses and social security numbers should be reviewed and accurate.
• Final benefit deductions, PTO pay outs, fringe benefits, etc are accurate.

In the 2025 calendar year, there are 53 Wednesdays. If you have a Wednesday pay day, and you pay your exempt (salaried) employees based on an annual salary, you may want to consider adjusting their weekly or bi-weekly payroll amount to accommodate for a potential additional check. This may or may not apply to you, but we don’t want you to be caught flat-footed at the end of 2025 and potentially overpay an exempt employee when you didn’t want to. Skipping a payroll for most employees is not very palatable.