The 2026 Year-End HR Checklist for Small Businesses 

Year-end is more than a time to wrap up payroll and celebrate another year. It is also an opportunity to take a closer look at your workforce, policies, benefits, compliance responsibilities, and HR processes before the new year begins. 

Use this checklist to review the key HR items your small business should address before 2026 ends. 

Key Takeaways 

• Review your records. Make sure employee, payroll, benefits, and HR information is accurate before the year ends. 
• Prepare for year-end reporting. Review payroll records and make sure you’re ready for W-2 processing and other applicable requirements. 
• Address outstanding employee matters. Don’t allow unresolved performance, disciplinary, or employee relations issues to carry over without a plan. 
• Look ahead to 2027. Review workforce needs, hiring plans, benefits, and compensation considerations. 

What employee and payroll information should you review before year-end?What employee and payroll information should you review before year-end? 

Start by making sure your employee records are accurate and up to date. Small errors can create problems when it’s time to process tax forms or make changes in the new year. Make sure any changes that occurred throughout the year have been properly reflected in your HR and payroll systems. 

Review: 

• Employee names and addresses 
• Social Security numbers and other required employee information 
• Employment status and job titles 
• Pay rates and compensation changes 
• Direct deposit information 
• Federal and state tax withholding information 
• Employee classifications 
• New hires, terminations, and status changes 
• Timekeeping and payroll records 

How should small businesses prepare for W-2 processing? 

Year-end is the time to make sure your payroll records are ready for W-2 processing. 

Review employee wage and tax information, confirm that payroll records are complete, and identify any discrepancies that need to be corrected before W-2s are prepared and distributed. 

Employers should also make sure they understand applicable federal, state, and local reporting requirements and deadlines for the upcoming tax season. 

What should you review about PTO and vacation balances? 

Review each employee’s available paid time off (PTO) or vacation balance before the end of the year. 

Check your policies to determine: 

• Whether unused PTO carries over 
• Whether there is a maximum carryover amount 
• Whether unused time is paid out 
• When employees need to use accrued time 
• How PTO requests are handled around the holidays 

State and local laws may also affect how employers can administer certain types of paid leave, so make sure your policies and practices align with the requirements that apply to your employees. 

What holiday pay and scheduling rules should you confirm? 

Holiday schedules can create questions about employee hours, overtime, paid holidays, and time off. 

Before the holidays, confirm which days your business will be closed, which employees are expected to work, how you handle holiday pay, and how employees should record their time. 

If your business has a holiday pay policy, make sure managers and employees understand it. Federal law generally does not require private employers to provide paid holidays, but state or local requirements and company policies may apply. 

Are your employee handbook and HR policies still up to date? 

The end of the year is a good time to review your employee handbook and identify policies that need updating for 2027. 

Consider whether your policies accurately reflect your current: 

• Workplace practices 
• Remote or hybrid work arrangements 
• Attendance and scheduling expectations 
• Paid time off policies 
• Leave policies 
• Technology and social media expectations 
• Workplace conduct standards 
• Safety procedures 
• Employee benefits 

Changes in federal, state, or local employment requirements may also mean certain policies need review or revision. 

What employee performance or disciplinary matters should be addressed? 

Don’t let unresolved employee issues carry over into the new year without a plan. 

Review outstanding performance concerns, disciplinary matters, employee relations issues, and documented coaching conversations. Make sure relevant documentation is complete, consistent, and stored appropriately. 

If an issue requires additional action, determine who is responsible for addressing it and establish a timeline for the next steps. 

What should you review before the next benefits enrollment period? 

If your business recently completed or is preparing for open enrollment, make sure employees have received the information they need about their benefits. 

Review whether: 

• Employees completed required enrollment steps 
• Benefit elections were submitted accurately 
• Employee contributions are correct 
• Payroll deductions reflect current elections 
• Employees received required notices or communications 
• Benefit changes are ready to take effect in 2027 

It’s also a good time to review how your current benefits package supports your workforce and whether you should consider any changes for the coming year. 

What should small businesses review about employee classifications? 

Year-end is a good time to review whether employees are properly classified, especially if your business has experienced changes in roles, responsibilities, pay structures, or work arrangements during the year. 

Review applicable employee classifications and make sure your payroll and HR records reflect those classifications accurately. Classification questions can involve wage-and-hour, tax, benefits, and other legal requirements, so employers should seek qualified guidance when needed. 

What HR records should your business review and retain?What HR records should your business review and retain? 

Take time to make sure important HR records are organized and retained according to applicable requirements and your company’s recordkeeping practices. 

Depending on the record, this may include: 

• Payroll and timekeeping records 
• Employee personnel records 
• Hiring and onboarding documentation 
• Benefits records 
• Leave documentation 
• Performance and disciplinary documentation 
• Workplace injury and safety records 
• Required employment and tax records 

A year-end review can help you identify missing information before you need those records. 

What should you review about workplace safety and workers’ compensation? 

HR and workplace safety responsibilities don’t stop at the end of the calendar year. 

Review workplace injury records, safety incidents, workers’ compensation claims, and any outstanding safety concerns. Consider whether your employees need updated training or whether certain workplace hazards need addressing before 2027. 

Year-end can also be a good time to review your workers’ compensation information and make sure relevant employee and payroll data is accurate. 

What hiring and workforce needs should you plan for in 2027? 

Your year-end HR review should look forward as well as backward. 

Review your hiring activity, turnover, open positions, employee growth, and anticipated business needs. Consider where your workforce may need to expand or where certain roles may need additional support in 2027. 

Ask: 

• Which positions will we need to fill? 
• Do we expect to add or reduce headcount? 
• Where did we experience turnover in 2026? 
• Are there skill gaps on our team? 
• Do compensation or benefits need to be reviewed? 
• What recruiting challenges should we plan for? 

How can GMS help small businesses prepare for the new year? 

For small businesses, keeping up with HR responsibilities can be challenging when HR is only one part of your job. GMS can provide support with many of the administrative responsibilities involved in managing employees, helping businesses enter the new year with organized HR processes and resources. 

GMS can support your business with: 

1. Payroll administration to help manage employee pay and year-end payroll processes 
2. HR support for employee questions, policies, and day-to-day HR needs 
3. Benefits administration to help manage employee benefits and enrollment 
4. Compliance support to help businesses keep track of applicable HR requirements 
5. HR technology through GMS Connect to help organize employee and HR information 
6. Workplace safety and risk management to help support a safer workplace 
7. Employee onboarding and management throughout the employment lifecycle 

A year-end HR checklist can help you identify what needs attention now and what to carry into 2027. 

GMS can help you simplify the HR side of your business so you can spend less time managing administrative tasks and more time focused on your people and your goals for the year ahead.