Year-End Payroll Checklist: Preparing W-2s, 1099s, and Records the Right Way

As the calendar turns toward year-end, payroll becomes one of the most important tasks for business owners. From W-2s and 1099s to final pay runs and record reconciliations, accuracy now prevents headaches later.

At MCAC, we help Alaskan businesses navigate this busy season with structure and clarity. Here’s how to approach your year-end payroll the right way so you start 2026 confidently and compliant.

1. Reconcile All Payroll Records

Before you generate any forms, make sure your payroll data matches your general ledger, bank statements, and tax filings. Check gross pay, deductions, and employer taxes for each employee. Reconciled records ensure that W-2 and 1099 figures line up with what was actually paid.

2. Confirm Employee and Contractor Information

Names, addresses, and Social Security or EIN numbers should be reviewed and updated before forms are filed. A simple mismatch can delay filings or trigger IRS notices. Have each employee and independent contractor verify their details before the final payroll run.

3. Understand Who Gets a W-2 vs. a 1099

Employee classification matters for compliance. W-2s cover employees whose taxes you withhold and remit; 1099-NECs cover independent contractors you’ve paid $600 or more during the year. If you’re unsure about classification, MCAC can review your records to help you avoid costly missteps.

4. Review Benefits and Deductions

Double-check that retirement plan contributions, insurance premiums, and any pre-tax benefits are recorded correctly. Confirm that manual adjustments, like bonuses or final expense reimbursements, were entered to the right accounts and pay periods.

5. Prepare and Distribute Year-End Forms

Most businesses must provide W-2s to employees and file with the Social Security Administration by January 31. The same deadline applies for sending 1099s to contractors and submitting copies to the IRS. Use secure electronic delivery where possible and retain copies of your records.

6. Archive and Safeguard Your Data

Payroll records should be kept for at least four years. Store digital files in a secure, backed-up system and restrict access to authorized personnel only. Organized records simplify future audits and make new year reporting seamless.

7. Plan Ahead for Next Year

Use this time to review your payroll process for efficiency. Are your software settings, tax rates, and deduction tables ready for January? Would outsourcing payroll or engaging a Fractional CFO save time and reduce risk? A brief consultation with MCAC can set you up for a smoother year.

Year-end payroll doesn’t have to be a scramble. With accurate records and clear procedures, you can close the books confidently and start the new year on solid financial footing.

📞 Need help reviewing your payroll process before year-end? MCAC is here to help Alaskan businesses stay organized, accurate, and ahead of schedule.