If you're a small business owner going through the year-end payroll process for the first time, it is important for you to understand the tasks and objectives associated with year-end payroll processing.
Some of the tasks are simply good housekeeping practices (i.e. verifying your employee's social insurance numbers, reviewing your payroll system, etc), while others are legislative requirements (i.e. ensuring your payroll taxes have been remitted accurately, filing employee T4 slips and summaries with the CRA, etc.) that could result in costly fines.
To ensure a stress-free year-end season, we prepared a step-by-step year-end payroll checklist to help you and your payroll team plan and complete the important payroll tasks required to close out the calendar year and kick start your new year on the right note.
Follow our year-end payroll checklist to minimize any surprises and enjoy the holiday season!
Year-end Payroll Checklist for Small Businesses
1. Preparation for year-end payroll processing
Objective: To establish a clear understanding of your organization’s year-end payroll processes and payroll deadlines
- Create a folder for your year-end payroll documents
- Determine which forms will be required - T4s or T4As
- Choose a filing method for your T4s and returns - Paper, Online, etc.
- Choose a method of delivery for your employees’ T4s - Paper, Online, etc.
- Make a note of all the payroll filing deadlines and penalties for non-compliance
- Establish policies and procedures for amending or cancelling slips
2. Reconciling your payroll
Objective: To ensure your payroll balances and deductions have been calculated and done accurately through the year
- Review your current payroll set-up to ensure your employees’ earnings, taxable benefits and deductions have been programmed accurately
- Audit taxable benefits to ensure they were applied accurately
- Process any taxable benefit adjustments
- Update any manual or cancelled cheques to payroll
- Reconcile your payroll bank account for uncashed or stale-dated cheques that need to be replaced or cancelled
- Balance payroll tax account remittances to the payroll register
- Run test T4 slip and summary report to validate earnings, benefits and deductions are reported in the correct boxes and balance to the payroll register
- Conduct self-PIER audit of CPP and EI statutory deductions
- Remit outstanding CPP and EI statutory deductions with or before final remittance for tax year
- Ensure accurate social insurance numbers are reported
3. Pension adjustments
Objective: To ensure you have applied your employees’ pensions correctly
- Validate pension earnings as per the company plan document
- Calculate the pension adjustment
- Complete RPP registration number reporting in Box 50 for all plan members
- Reporting of taxable refunds if necessary
4. Filing T4s
Objective: To provide employees access to their T4s on time
- File employee T4 slips and summaries with CRA
5. Filing other jurisdictional returns
Objective: To ensure your organization has complied with other jurisdictional requirements
- File Employer Health Tax returns
- File Workers’ Compensation Annual reconciliation/return
6. Year-end accounting
Objective: To ensure your payroll is reconciled with your year-end accounting
- Ensure your year-end accruals are reflected in your accounting system
- Reconcile all payroll related general ledger accounts
- Validate that your earnings and deductions are charged to the correct general ledger cost centre accounts
7. Set-up for new payroll year
Objective: To ensure your organization is up-to-date and compliant with payroll legislation updates
- Review payroll calendar for payroll processing/payday conflicts (statutory holidays, etc.)
- For weekly or bi-weekly pay frequency, check for a 53/27 pay year (How will CPP exemption be handled? Are any taxable deductions or deductions affected?)
- Distribute new payroll cut-off schedule to your HR, time keepers, managers, supervisors and unions (if necessary)
- Ensure accrual balances are audited and carry forward balances are applied: Vacation accruals, Banked overtime, Unused sick days (if carry forward allowed), Outstanding loan payable, Garnishment balances.
At Enkel, we provide payroll management services to businesses and nonprofit organizations across Canada. From biweekly payroll processing to T4 preparations and tax filings, our team of payroll certified professionals can help you stay compliant and worry-free. Get in touch with us today to learn more about our payroll services.