December payroll needs extra attention. Banks, payroll providers, and the IRS often treat year-end runs differently, so timing and accuracy matter more than usual.

• Holiday-adjusted payroll deadlines: Banks may close or cut off early on Christmas Eve, Christmas Day, and New Year's Day. You may need to submit payroll 1--3 days earlier than normal. Watch for notices from your provider.
• Bonus timing & taxation: Decide whether bonuses will be taxed as regular wages or as supplemental wages, and confirm how your payroll system handles each.
• Employee addresses: W-2s are issued based on what's in payroll. Bad addresses = lost W-2s, frustrated employees, and avoidable reprints.
• Electronic W-2 delivery: If your system allows e-delivery, remind employees to opt in now. One reminder now can prevent a flood of "I never got my W-2" emails in January.
• Manual/off-cycle payments: Make sure handwritten checks, reimbursements, and late corrections are added into payroll so they appear on W-2s.

December is peak PTO season, and many states have specific rules on year-end carryover, especially for sick leave.

• Balance accuracy: Look for negative balances, unapproved time, or missing entries from earlier in the year.
• Policy details: Confirm what your policy actually allows: carryover, caps, payouts, or "use it or lose it" (where legally allowed).
• Employee communication: Send a clear reminder explaining what happens to unused PTO and sick time on December 31.

Most health, dental, and vision plans renew on January 1. Payroll deductions and carrier records need to match exactly.

• Open Enrollment updates: Confirm every election from Open Enrollment is entered into payroll and matches carrier confirmations or invoices.
• New rates: Verify that any premium changes are reflected in payroll deductions.
• Waivers of coverage: Save declination forms where employees waived coverage--they're important for compliance.
• Plan change summaries: Communicate any updates to deductibles, copays, and networks before January 1.

Many labor law changes take effect on January 1, but the prep work belongs in December.

• Minimum wage increases: If you operate in multiple states (or multiple California cities), each may have its own wage changes.
• Exempt salary thresholds: If thresholds increase, some salaried employees may need a raise or a move to nonexempt status.
• Tax tables & SUTA rates: Your payroll provider usually updates these, but it's your responsibility to confirm.
• Labor law posters: Update required postings and ensure remote employees receive electronic versions.
• Annual required training: States like CA, CT, IL, ME, and NY have harassment-prevention training requirements with ongoing deadlines.

Certain benefits count as taxable income and must be included on employees' W-2s. December is the time to true-up those amounts.

• Group-term life insurance: Coverage over $50,000 may be taxable.
• Company vehicle use: Track personal mileage and apply an approved valuation method.
• S-Corp owner health premiums: Confirm owner premiums are recorded correctly in payroll.
• HSA, FSA & commuter benefits: Reconcile contributions so year-end totals are accurate.

December is an ideal time to refresh your handbook so a clean, updated version is ready to roll out on January 1.

• New state and local laws: Update policies that are impacted by new regulations.
• Outdated references: Remove references to old systems, locations, or processes you no longer use.
• Remote and hybrid work rules: Clarify expectations for schedules, communication, data security, and equipment.
• Leave policies: Make sure sick leave, family leave, and other time-off policies match current law.
• Multi-state addenda: If you have employees in multiple states, add or update state-specific supplements.