As a robust and highly involved undertaking, particularly for enterprise organizations, year-end payroll processing is the annual procedure that takes place during the final quarter of the year and extends into the first quarter of the following year. Businesses are legally required to go through the process of year-end payroll as it relates to federal, state, and local tax liabilities and employee wages. Organizations are then required to process W-2 filing for the IRS as well as generate W2 reports for employees.
For organizations using Oracle Cloud HCM, there are a few key considerations and things to keep in mind when conducting payroll year-end processing to ensure that it goes smoothly.
For end-of-year processing in The United States, Oracle recommends running a trial process prior to the beginning of Q4 in a test environment. This will help ensure that you’re prepared for the necessary year-end processing activities that come in Q4 and Q1 of the following year. Oracle outlines 15 steps that should be performed, in order, so that the year-end processing can take place in Cloud HCM:
- Configure for end-of-year
- Order year-end tax form paper stock
- Complete all payroll processing for the year
- Perform your prearchival processing
- Fix any balance problems detected by the prearchival reports
- Perform your quarter-end processing for the fourth quarter, and resolve any errors detected
- Use the Assign Control Number for Puerto Rico Employee flow to assign W-2PR control numbers to your Puerto Rico employees
- Archive your end-of-year payroll results
- Perform year-end balance reconciliation, and resolve any errors detected
- Use the W-2 Register Report to validate your archived data, resolve any balance issues detected, and repeat the year-end data archive
- Generate the year-end tax and wage reports
- Distribute the employee forms as indicated by employee election
- Lock the W-2 and W-2c document types in Document Records to prevent them from being changed
- Run the year-begin flow
- If changes are required to your year-end tax data after you distributed your employee year-end forms, generate and distribute Form W-2cs
Depending on the nature of your organization, your team may need to amend these steps to better fit your organization’s requirements. You’ll want to document any changes you’ve made to this process so that in future years you’re able to ensure consistency and proper processing in the future. For additional details and steps to complete year-end processing, see the Oracle 22D guide for administering end-of-year processing here.
Running Year-End Reports
For the purpose of validating W-2s and your balances and ensuring accuracy, running reports is a crucial part of your year-end processing.
- Step 1: Run Balance Exception Report for both Federal and State
- Step 2: Correct Balances using Balance Adjustments if needed
- Step 3: Rerun Balance Exception Reports, and continue process until all exceptions are cleared
- Final Steps: Run End of Year Archive, W-2 Employee Report, W-2 Register
Once you’ve corrected balances, rerun them, and reports show a final balance of zero, no other adjustments are required and you’re able to conclude your year-end processing. For an overview of Cloud Reporting Tools and Analytics, check our our Blog, “Cloud HCM Analytics and Reporting Overview.”
Year-End Payroll Processing Additional Considerations
Being proactive in your quarterly processing ensures that you’re setting yourself up for success and eliminating potential stress, due to the fact that you’ve already done the majority of the work ahead of time. Accurate quarterly processing means that Q4 is the only processing required before moving on to year-end.
Additional Support for Year-End Processing
Beginning your year-end processing now allows for better and more efficient delivery of W-2s and will make things easier in January. Pulling your balance exception reports quarterly so appropriate balances can be adjusted before the end of year is a great step toward making this process more efficient for you and your organization.
My Oracle Support provides numerous applicable technical briefs as resources for you. For further info, see the United States Information Center (2063588.2) on My Oracle Support. The Oracle Help Center offers step-by-step guidance and support for conducting year-end processing in Cloud HCM.
If you’re not quite sure where to start or need assistance, Elire is here to help. Reach out to [email protected] with questions or to set up a time with our experts.