From Wrap-Up to Ramp-Up: Navigating Year-End and Year-Start

As fall approaches, it’s time for many companies to begin wrapping up the year and planning for 2026. At TriNet, we call this important period “Year-End/Year-Start.” It is a key time for business leaders and HR professionals to work on critical payroll tax and Form W-2 tasks. Here are some important reminders to keep you on track.

Preparing for Year-End

First, it’s important to review the following information to ensure accurate wage reporting and payroll taxes:

• Correct employee wage over- or under-payments,  
• Report all fringe benefits and imputed income, 
• Capture and report year-end bonus and commission information, 
• Review next year’s federal tax rates and limits, as well as applicable federal, state and local minimum wage and salary bases, to see if there have been any changes, and 
• Report equity transactions and non-qualified deferred compensation, if applicable. 

Next, to make sure your employees receive accurate Form W-2s, it’s critical to report, if applicable, employer-sponsored health coverage required under the Affordable Care Act (ACA). If you are unsure whether this applies to your business, visit the IRS website. It contains information specific to employers, including a page on how to determine the size of your workforce and what that means under the ACA.  

Other items to consider as you close out the year and look ahead to 2026: 

• Although statutory and regulatory changes happen throughout the year, we typically see a high number of changes that take effect on January 1. Review the state, city and local statutory and regulatory information where your employees work to see if any changes take effect January 1. Then, adjust policies, procedures or other items to help make sure you remain in compliance. 
• Review and make any necessary changes to your 2026 company holiday schedule. And be sure to communicate those changes to your employees so they know what to expect in the coming year.
• Encourage employees to review their 401(k) contribution elections prior to January 1, 2026. 

With the new year around the corner, we recommend reviewing your company’s policies and procedures such as employee handbooks and any standalone policies such as time off and expense policies. If you need to make updates, be sure to notify and communicate changes to your employees so they are prepared going into 2026.

Although completing these tasks can be time-consuming, remember to recognize those who make your business thrive: your employees. Take time to consider how you can show your appreciation for the contributions they’ve made, as this may increase company morale and motivation as they enter the new year.

Preparing for Year-Start

Now is the time to review your employees’ time-off requests to ensure that any requests submitted for 2025 are approved before your last payroll of the year is processed. This will help you avoid any last-minute payroll complications and ensure you close out 2025 with accurate time-off balances for your employees.

If your pay period includes both 2025 and 2026 dates, be sure that you are allocating the time-off hours taken to the correct year. If this is overlooked, it can have an impact on your employees’ time-off balances and your company’s books.

If any of your employees claimed an exemption from income tax withholding in 2025, they need to renew their exemption by February 17, 2026. This can help prevent any unexpected tax surprises and keep things running smoothly for everyone.

If you run a larger food or beverage company, you may be required to report tip allocations. This is a compliance matter, so it’s vital that you check the rules and regulations in your area.

Additional items to review in January include federal tax rates and limits. Updates typically take effect then, and it’s critical to keep an eye out for any updates that may impact your business. Taking care of these essential tasks will set the stage for a fruitful year ahead.

© 2025 TriNet Group, Inc. All rights reserved. This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.

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