A new payroll year is a chance to clean up records and fix small issues before they grow. It’s also an opportunity to check your systems and processes, and to ensure your payroll processing is predictable instead of reactive. Here are some steps to consider for setting the stage for a clean start to payroll in 2026.
Review last year’s payroll performance. Start by looking at where payroll struggled in 2025. Note recurring errors, approval delays, or manual steps that slowed things down. Check any compliance notices or corrections you received. This review gives you a clear list of what to fix first, not just what went wrong.
Reconcile year-end data. Match payroll totals with accounting reports and bank activity so everything lines up cleanly. Confirm wages, bonuses, PTO payouts, reimbursements, and taxable benefits. Check that W-2 and 1099 details reflect the same numbers.
Update employee records and classifications. Correcting records now prevents compliance issues later. Check names, addresses, tax forms, and direct deposit details. Confirm job titles, pay rates, and exemption statuses. Remove former employees from active lists.
Refresh policies and internal controls. Review how timekeeping, approvals, overtime, PTO, reimbursements, and corrections are handled. Update outdated rules and tighten controls if access or responsibilities have shifted. Clear, current policies reduce confusion and support consistent payroll practices throughout the year.
Confirm 2026 compliance requirements. Check updated tax rates, wage thresholds, minimum wage changes, and overtime rules. Review industry mandates or union requirements. Update your payroll calendar with deposit and filing deadlines. Staying ahead of compliance changes prevents penalties and rushed fixes.
Optimize your technology. Evaluate whether your payroll system still fits your workload. Install updates, enable useful automation, and test integrations with HR, time tracking, and accounting tools. Remove old users and clean up permissions. A tuned system reduces manual tasks and errors. Consider whether partnering with a payroll provider makes sense for your situation.
Train your team. Bring the team up to speed on new rules, tools, and processes. Highlight common mistakes to avoid and clarify who is responsible for what. Strong training keeps everyone aligned and reduces backtracking during busy periods.
Communicate with employees early. Ask employees to confirm their personal details, tax withholding, direct deposit, and benefit elections. Share pay schedules and timecard expectations. Early communication cuts down on correction requests and keeps payroll running smoothly from the start.
Build a proactive monitoring plan. Set up monthly check-ins to review common error trends, late submissions, and reconciliation gaps. Keep a simple dashboard or checklist to spot issues early. Regular monitoring keeps small problems from turning into major disruptions.
Starting 2026 with clean data and updated processes keeps your payroll processing predictable and efficient. A little preparation now prevents hours of cleanup later and gives your team a strong foundation for the year ahead.