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Ledger/Payroll Year-End Guide

Close Payroll

If you have Payroll, you can print all of your year-end forms and close the calendar year.

Tip: If you have questions about the tax update, check out the Payroll Tax Update FAQs.

There are a few things you need to do to close payroll.

Back up your data

  1. On the File menu, click Backup / Restore / Archive > Backup Data.
  2. Enter a reason for the backup, such as "Backup before closing payroll".
  3. Select a backup method, and enter or select any relevant information.
  4. Click Start Backup.
  5. After your data is backed up, you can print the backup information for your reference.

Check your data for errors

On the File menu, click Test / Fix > Fix Data Discrepancies. If errors display, correct them before you continue.

Check for a program update

On the File menu, click Check for Program Update.

Finish entering all transactions

On the Transactions tab, click Accounting Overview. Make sure all transactions are entered for the year.

Update benefits and allowances

If needed, you can edit employee benefits/allowances, employer benefits, group-term life insurance, and dependent care information.

  1. On the Payroll tab, click Tax Setup > Benefits/Allowances.
  2. In the navigation pane, click the benefits/allowances you want to edit.
  3. Make any necessary changes.
  4. Click Save.

examples of employee benefits

Update employee wages and paychecks

If needed, you can edit employee wages or paychecks.

Employee Retention Credit (ERC)

In order for your preferred accounting firm to review, amend, and file your information, you must provide wage totals per employee from the following dates:

  • March 13 – March 31, 2020
  • April 1 – June 30, 2020
  • July 1 – September 30, 2020
  • October 1 – December 31, 2020
  • January 1 – March 31, 2021
  • April 1 – June 30, 2021
  • July 1 – September 30, 2021

Additionally, you must provide quarterly Form 941s for all four quarters of 2020 and the first three quarters of 2021.

This is for informational purposes only and should not be relied on as tax, legal, or accounting advice. Please consult with legal and tax professionals, and reference the official IRS website for more information.

  1. On the Payroll tab, click Employees > Wages/Master Paycheck.
  2. Locate the employee whose record you want to edit.
  3. Make any necessary changes.
  4. Click Print Actuals Report to verify that check totals are correct.
    Tip: It's useful to print this report for each employee before printing the first checks of the new year.
  5. Click Save.

Verify employee information for the Affordable Care Act (Form 1095-B or 1095-C)

If you haven't set health care coverage terms or added covered individuals yet, do that before running the proof list report.

  1. On the Reports tab, click Payroll Reports.
  2. Expand employee listing reports, and double-click Affordable Care Act Proof List.
  3. Proceed through the report windows, and select any necessary options.
  4. Select the employees you want to print, then click Preview.
  5. Verify that the information is correct. If it's not, go to the affected employee's QTD & YTD Totals window and make the appropriate changes on the Affordable Care Act tab.
  6. Print the report if you need it for your records.

Report Preview showing the Affordable Care Act Proof List

Run the monthly, quarterly, and yearly processes

  1. Run monthly reports and processes after you print your last paychecks.
    1. On the Transactions tab, click End of Period > Payroll End of Month.
  2. After you're finished with monthly reports and processes, you can run the quarterly items.
    1. On the Transactions tab, click End of Period > Payroll End of Quarter.
    2. Click Test Totals to ensure QTD/YTD totals are correct before running other items.
  3. When you're done running quarterly reports and processes, you're ready for yearly items.
    1. On the Transactions tab, click End of Period > Payroll End of Year.
    2. On the Processes & Reports tab, click Test Totals to make sure QTD/YTD totals are correct before running any other reports or processes.

Electronically file your tax forms

PDS partners with Nelco to offer tax e-filing solutions for federal and state W-2, 1099, 941, 944, and ACA forms. This is an optional service, offered at additional cost.

If you electronically file your tax forms, you do not need to print them.

Print W-2 and W-3 forms

  1. On the File menu, click Setup > Layouts > W-2 Layout.
  2. Select the form you're using, and click Test Print. If the form needs to be adjusted, change the settings on the Page Layout and W-2 Layout tabs until the form prints correctly.
  3. On the File menu, click Setup > Layouts > W-3 Layout. Check the layout.
    The W-3 prints after the W-2s.
  4. On the Transactions tab, click End of Period > Payroll End of Year.
  5. On the Processes & Reports tab, click Test Totals. If errors are reported, correct them now.
  6. On the Tax Forms tab, click Set Up and Print W-2s & W-3.
    1. In the W-2 Setup window, enter the necessary information.
    2. At the bottom of the window, note the explanation regarding Box 14 information.
    3. Enter the chart of account number you used in the QTD & YTD Totals window for that item.
    4. In the Description column, enter a short description to print next to the amount on the W-2.
  7. On the Tax Forms tab, click Print W-2s. A list of employees to print displays.
  8. Place the forms in the printer when prompted, and click OK.

W-2 Layout Style settings and the report preview showing how it will print

Print 944 forms

Only file the annual Form 944 (instead of Form 941 quarterly) if the IRS notifies you in writing.

  1. On the Transactions tab, click End of Period > Payroll End of Year.
  2. On the Processes & Reports tab, click Test Totals.
  3. Preview the report and ensure that every employee has "Correct" in the Comments column.
    example of the Test Totals report
  4. Close the report.
  5. On the Tax Forms tab, click Print 944.
  6. Place plain paper in the printer for the employee details report, then click OK.
  7. Click Next to select your printing options, then click Preview and Print.
  8. Click OK to continue.
  9. Click Next to select your printing options.
  10. Proceed through the report wizard. Select or enter the 944 field/option lines information.
  11. Click Preview and Print.

Print 1096 and 1099 forms

There are two types of 1099s that you may need to print. The 1099-NEC is for Non-Employee Compensation. The 1099-MISC is for anything else you paid to a vendor that is considered part of their income, such as rent.

  1. On the File menu, click Setup > Layouts > 1099 Layout.
  2. Select the correct form, and click Test Print. If the form needs to be adjusted, change the settings on the Page Layout and 1099 Layout tabs until the form prints correctly.
  3. On the File menu, click Setup > Layouts > 1096 Layout. Check the summary that prints after the 1099s.
  4. On the Transactions tab, click End of Period > Payroll End of Year.
  5. On the Processes & Reports tab, click Test Totals. Correct any reported errors at this time.
  6. On the Tax Forms tab, click Set Up and Print 1096 & 1099s. Enter the necessary information.
  7. Click Print 1099s.
  8. Place the forms in the printer when prompted, and click OK.
  9. Click Preview and Print.
  10. After the 1099s print, place the 1096 form in the printer when prompted, and click OK.

Print 1094/1095-B or 1094/1095-C

Before printing these forms, make sure you've set coverage terms and added covered individuals on each employee record. For more on ACA compliance, see our Affordable Care Act Resources.

Print the appropriate form for compliance with the Affordable Care Act (ACA).

  1. On the Transactions tab, click End of Period > Payroll End of Year.
  2. On the Tax Forms tab, click to print the forms you use.
  3. Proceed through the wizard, entering your information. For details on these fields, see Print Forms 1094-B and 1095-B or Print Forms 1094-C and 1095-C.
  4. Click Preview and Print.
  5. When you're finished, click Close.

Close the calendar year for payroll

Once you print all the reports and forms you need, you can close the payroll year.

  1. On the Transactions tab, click End of Period > Payroll End of Year.
  2. To save the information for next year, select Copy Employee Benefits, Copy Personal Activities, and/or Copy Affordable Care Act on the Processes & Reports tab. Otherwise, that information on the employee records is blank for the next year.
  3. If you want to overwrite any existing Affordable Care Act information, select that option.
  4. Click Close Calendar Year for Payroll.
  5. Label the backup as the "Year-end backup" and keep it separate from other backups.
  6. Click Yes when prompted to advance to the next year.

Close Calendar Year for Payroll information and options

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Last updated: February 28, 2024