Closing the year strong sets the stage for success in 2026. And with Aspen HR as your PEO partner, you can tackle your year-end HR responsibilities while staying focused on growth.
Here’s what should be on your 2025 year-end HR checklist, and how Aspen HR can help you execute with precision:
Payroll and Compensation Accuracy
Given the employee and tax implications, completing year-end payroll activities accurately and on time is a must. However, an EY study found that companies have an average payroll accuracy rate of only 80%. To increase the chances of error-free payroll, take these actions before year-end:
- Pay all remaining 2025 bonuses, commissions, and merit increases by the last payroll run of the year.
- Correct any overpayments promptly.
- Audit payroll records to confirm accuracy and avoid tax filing adjustment fees.
- Verify that every employee is set to receive the correct 2025 W-2 or 1099 form.
- Remind employees to verify their addresses, W-2 delivery preferences, and 2025 tax withholdings.
The Aspen HR Advantage:
We take payroll off your plate so you can stay focused on strategy. Our team ensures all 2025 employee payments are processed accurately and taxed correctly, so they don’t mistakenly roll over into 2026. We also help you navigate new compliance requirements under the Big Beautiful Act, including accurate tracking and reporting of qualified tips and overtime premiums retroactive to January 1, 2025.
Benefits Administration and Tax Reporting
Year-end benefits tasks require careful attention to avoid compliance issues and employee dissatisfaction. Therefore, be sure to:
- Finalize all 2025 HSA contributions to be included on the 2025 5498-SA HSA Tax Form.
- Confirm taxable benefits for accurate W-2 reporting, e.g., employer-paid health insurance, dependent care benefits.
- Prepare Affordable Care Act (ACA) reporting so that IRS filings can be completed by February 28 (paper) or March 31 (electronic).
- Encourage employees to review their planned 2026 401(k) contributions and confirm any catch-up contributions.
The Aspen HR Advantage:
We simplify benefits administration by managing employer contributions, employee deductions, compliance, and reporting requirements. Our team ensures your ACA filings, if applicable, are accurate and on time, and we provide access to competitive benefit plans that help strengthen employee retention heading into 2026.
Compliance and Labor Law Updates
Keeping up with regulatory changes is crucial for avoiding costly penalties. To stay compliant:
- Update payroll systems for new state and local minimum wage rates.
- Order updated labor law posters reflecting 2026 requirements, including state minimum wage and paid leave changes.
- Refresh employee handbooks to reflect policy changes.
The Aspen HR Advantage:
Our proactive approach keeps your company compliant and reduces exposure to risk. We monitor federal and state regulatory changes and deliver updates to our clients throughout the year. Additionally, we’re unique in being the only PEO with a full-time employment attorney on our team.
Employee Experience and Strategic Initiatives
Demonstrating your commitment to a positive employee experience is essential for retaining talent and driving growth now and into the future. Start 2026 on the right foot, and:
- Complete performance reviews and set goals for the new year.
- Conduct an engagement survey to gather employee feedback on 2025 experiences.
- Plan upskilling initiatives for critical skills as roles evolve.
The Aspen HR Advantage:
We provide expert guidance across the full HR spectrum, including performance management, employee engagement, and training. Our team helps you manage the day-to-day and the strategic HR priorities that will help you hire, engage, and retain the best people.
HR Priorities to Think About for 2026
As you close out 2025, it’s important to look ahead to the first quarter of 2026. Several compliance deadlines will shape your HR agenda early in the year, including:
- January 1: New state and local minimum wage rates take effect, so update payroll systems now to avoid errors.
- February 2: Distribute W-2s and 1099-NEC forms to employees and contractors and file them with the SSA and IRS (electronic filing is recommended).
- February 10: File Form 940 to report your annual federal unemployment tax (FUTA).
Beyond these important dates, you can also expect emerging trends to continue to influence your HR strategy, including responsible AI adoption and employee well-being as a retention driver. Addressing these issues proactively will help you stay competitive as your business evolves.
Get 2026 Off to a Successful Start
Your 2025 year-end HR checklist is an excellent roadmap for future success, and Aspen HR can help you manage HR responsibilities while focusing on growth. With our concierge PEO support, you’ll enter 2026 ready to lead. Speak to a member of our team to get started.