As the year draws to a close, it’s essential for small business owners to ensure their human resources (HR) processes are primed for 2025. Proper year-end HR management sets the stage for a successful new year and keeps your business compliant. Here’s a comprehensive checklist to help you make this important transition:
Verify Employee Information
Typically, you’ll update employee information throughout the year. However, if you’ve had a lot of changes or growth, certain information can slip through the cracks. Accurate employee records are vital for compliance and tax purposes.
With that in mind, you should review all personal details with your employees. Verify that you have current addresses, phone numbers, and emergency contact data on file. Confirm that job titles and employment statuses are accurate as well. A seemingly simple mistake could lead to major headaches.
Finalize Payroll and Tax Documents
As soon as the year ends, your HR team needs to finalize all payroll and tax documents. That way, you can issue W2s as quickly as possible. Ensure all wages, bonuses, and commissions for the year are accurately calculated and disbursed.
Generate W-2 forms to employees and 1099 forms to contractors by the IRS deadline. You don’t want to prevent any of your team members from filing their personal income taxes, as that would draw the ire of the IRS.
Review and Update Employee Benefits
Review your current list of benefits offerings to ensure that it is competitive and appealing. According to 88% of employers, health-related benefits remain the most important.
However, wellness, technology, and career development perks are becoming increasingly prevalent as well. For example, 61% of job seekers consider wellness programs to be important when they are looking for a new position.
As a small business, you may be limited in what perks you can offer. That means you’ll have to think outside the box to identify benefits that attract talent without breaking the bank. For example, you could offer flexible work hours to accommodate each employee’s personal obligations.
Conduct Performance Evaluations
Now is the perfect time to conduct performance evaluations. However, it’s crucial that you structure these sit-downs in a way that supports each employee’s unique professional journey.
Talk about what went well and what each employee wants to improve in 2025. Discuss both what the company and the employee can do better in the new year. Identify ways to help your team members reach their full potential and develop new skills. That way, they know you are investing in them for the long haul.
Update Your Handbook and Policies
Keeping your policies current is essential for maintaining legal compliance and redefining roles as your business grows. Examine existing policies to ensure they align with current company practices. If you need to make changes, get key members from each department involved to come up with new rules that are practical and useful.
Plan for the New Year
The human resources department needs to be involved in strategic planning. HR activities have a direct impact on every area of your business, including productivity, profitability, and employee retention.
Make your HR leaders feel heard and use them to assist with workforce planning and budgeting. These professionals can provide valuable input that sets the stage for success in 2025.
Ensure Compliance
Find out what state or federal laws are changing in 2025, and make sure you are ready to accommodate them. You’ll also need to verify that required labor law posters are up-to-date and displayed in required locations. Stay informed about any changes in employment laws that may affect your business operations.
Boost Employee Engagement
According to Gallup, just over half of U.S. employees are disengaged at work. Poor engagement can lead to decreased productivity and higher quit rates, both of which are bad for business. The good news is that HR can foster better employee engagement, and 2025 is the perfect time to start.
Identify programs that make your team members feel valued. For example, launching an employee recognition program can fuel change in your organization by showering your most productive team members with attention when they do something positive. Celebrate major milestones to keep morale high and build momentum in the new year.
Need Help Prepping for 2025? Contact Focus HR
With the new year almost here, there’s not much time to solidify your 2025 HR strategy. If you need help getting your HR infrastructure ready to dominate the new year, Focus HR can help.
Our team provides personalized human resources solutions, including consulting, payroll management, and benefits management. Schedule a free consultation to learn more.
