End-of-Year HR Prep: What Business Owners Need to Know

As the year wraps up, business owners have plenty on their plates—from closing out financials to planning for the year ahead. But one area that shouldn’t be overlooked is end-of-year HR preparation. Taking a few key steps now can help set up your business and employees for a smooth and successful start to the new year. Here’s your checklist to make sure you’re covering all your HR bases.

1. Update Your Employee Handbook

The end of the year is the perfect time to review and update your employee handbook. Policies may need adjustments to reflect changes in labor laws, benefits, or company standards. Reviewing your handbook annually helps ensure it’s accurate, compliant, and ready for distribution. Once updated, be sure to have a lawyer, who specializes in employment laws, review for legal compliance and then share the handbook with employees and have them acknowledge any new changes.

2. Prepare Payroll for the New Year

Get payroll in order to avoid hiccups in the new year. Confirm that employee classifications (exempt or non-exempt) are accurate, review any changes to withholding requirements, and ensure bonuses and year-end adjustments are correctly processed. Taking these steps now helps avoid payroll errors and keeps things running smoothly.

3. Plan for 1099s and W-2s

Make sure you’re prepared to issue 1099 forms for contractors and W-2 forms for employees by January 31st. Review information for accuracy, including addresses and Social Security numbers. If your business provides health insurance, you may also need to issue ACA forms (1095-C). A quick end-of-year review ensures you have all the correct details in place.

4. Wrap Up Open Enrollment and Benefits Adjustments

If you offer employee benefits like health insurance or retirement plans, review any changes made during open enrollment and verify that updates are accurately recorded. It’s also a good time to remind employees of any tax-advantaged accounts (like FSAs) and provide them with deadlines to spend any remaining balances.

5. Conduct an Internal Records Audit

Reviewing employee records can help your business remain compliant and organized. Ensure all records, such as I-9 forms and employee contact details, are up-to-date and securely stored. Also, make sure you’re keeping records in accordance with state and federal retention requirements, especially for any employees who have left the company.

6. Review Overtime and Classification Policies

As many businesses experience a holiday season surge, take time to confirm that employees’ overtime and exemption classifications are accurate. Misclassifying employees can lead to fines or back pay, so it’s worth double-checking job duties and wage levels.

7. Prepare for Upcoming Labor Law Changes

New year, new laws! Take a look at any updates in labor or employment laws that might affect your business in the coming year. This may include adjustments to minimum wage, new paid leave regulations, or other requirements. Planning for these changes ahead of time will help ensure compliance and avoid any surprises. Don't forget to purchase or print new employment posters at the beginning of the year (HR Branches makes and sells them, reach out for more information).

8. Reassess Workplace Safety and Training Needs

Safety isn’t just about compliance—it’s about protecting your employees. Make sure your workplace safety protocols are current and check that employees have completed any required training. If there were any incidents during the year, use these as learning points to adjust and improve your safety practices.

9. Keep Employees Informed

Once you’ve completed your year-end HR checklist, communicate any key updates to your employees. Whether it’s a reminder about handbook changes, benefits adjustments, or safety protocols, keeping your team informed ensures everyone is aligned and ready for the new year.

The Benefits of End-of-Year HR Preparation

Preparing now means you’re ready to hit the ground running when January arrives. By taking these steps, you not only improve compliance and minimize risks, but you also show employees that you’re invested in a well-organized, fair, and safe workplace. A little prep now goes a long way toward creating a successful new year.