How do I close the year in Payroll?

Follow the procedure outlined to close the year in Payroll. Don’t manually close the year in PR Settings because the stored totals don’t update properly. This causes issues with your Payroll reporting and reconciliation.

Prerequisites

Before you close the year, print all the necessary month-to-date, quarter-to-date, and year-to-date reports associated with the year you’re closing. Use date ranges 01/01/20YY through 12/31/20YY. You can print 4th quarter and W-2 forms before or after closing the year. It stores prior quarter totals as far back as one quarter only, and stores prior year totals as far back as one year only.

If the last pay period extends beyond the calendar year-end date of 12/31/20YY, you may want to create accrual entries. These entries are for the earnings expense portion of the time entered to get a clearer picture of year-end costs. Select Tasks, Generate Accrual Entries and create entries for Billing, Equipment Cost, General Ledger, and Job Cost. These accrued entries are part of your reconciliation process at year-end, but they don’t affect your W-2 employee totals. In accordance with IRS guidelines, we update Payroll files by check date rather than period-end date. For more information, refer to “Generating Accrual Entries” in Payroll Help.

Review all pay, deduction, and fringe setups to verify that you've correctly selected the Retain YTD totals at close year box. See more information about the Retain YTD totals setting.

Close the year after posting all checks and corrections for the year that’s ending, and before processing your first payroll of the new year.

Close the year

1. Back up your data before closing the year.
   Note: You can use this backup for reporting purposes or a data restore.
2. From the Payroll Tasks menu, select Close year.
3. Click Start, and then Yes.
4. Review the Close Year report.
5. Go to File, Company Settings, PR Settings.
6. Verify that the Current Month is January and the Year-end date is correct.

Effect of closing the year

The Close year task does the following:

• Reminds you to back up your Payroll master file
• Clears MTD, QTD, and YTD totals in the Payroll master file
• Moves employee totals to the prior period fields
• Changes the Current Month to January and the year-end date to 12/31/20YY in the Payroll Settings window

Where can I find Year-End Procedures Guides (YEPG)?

I closed the payroll year too early in Payroll

I forgot to close the year before I printed checks in Payroll for the new year.