The holiday season can be a joyful time to unwind with loved ones. However, it can also bring high-pressure deadlines for payroll and tax filings, especially as businesses wind down for the year. If payroll isn’t processed on time, employees may lose trust in the organization and face personal stress from holiday spending.
With these holiday payroll best practices, you can proactively set up payroll schedules to avoid holiday delays. Here’s how.
Why Holiday Payroll Planning Matters
Adjusting payroll schedules for the holidays is essential to meet filing deadlines and ensure employees receive their paychecks on time. Here are some of the most common holiday payroll challenges:
- Bank Closures: Most banks are closed on Christmas Day and New Year’s Day, and some may also close early on Christmas Eve or the entire last week of December.
- Limited Processing Staff: Financial institutions typically have reduced staffing between Christmas and New Year’s, leading to processing delays.
- Reduced Office Staff: Your organization may have fewer employees available to handle payroll from mid-December through early January.
Since holiday payroll delays are expected, advance planning is key to creating a reliable holiday payroll schedule that ensures compliance and smooth operations.
Tips for Managing Payroll During the Holidays
Know the Holiday Calendar
Start by noting federal and state bank holidays, along with any blackout dates announced by payroll processors and external accountants. These dates will guide your holiday payroll schedule, helping you avoid disruptions.
Schedule Payroll Processing Early
Early processing helps you beat holiday delays by getting your payroll data through queues before other organizations join the rush. For any additional payments, such as holiday bonuses, plan a separate processing round. Establishing an early core payroll schedule ensures compliance and timely paycheck issuance.
Communicate with Employees
Let employees know about any holiday-related payroll changes well in advance. Use email memos, internal portals, or announcements on platforms like Slack to inform employees about holiday payroll schedules and any expected delays.
Double-Check for Accuracy
Review payroll data thoroughly for accuracy and confirm any last-minute adjustments, such as withholding changes. Ensuring accuracy before early processing helps avoid issues caused by holiday payroll schedules and ensures correct payroll deductions and tax calculations.
Common Pitfalls to Avoid with Holiday Payroll
- Overlooking Bank Holidays: While Christmas and New Year’s closures are predictable, some banks may have additional closures or reduced hours, causing processing delays. Contact your bank in advance to confirm holiday hours and closure dates.
- Not Clearly Communicating Changes: Employees may expect holiday payroll schedules to impact pay timing but won’t appreciate surprises. If paychecks will be delayed by a few days, communicate this clearly to help employees plan accordingly.
- Ignoring Tax Implications of Bonuses: Year-end and holiday bonuses have tax implications and may need extra processing time. Plan a separate payroll cycle for bonuses, ensuring taxes are withheld correctly and the main payroll processing is uninterrupted.
How Payday Can Help Ensure Timely Payments During Holidays
Payday’s payroll solutions are designed to keep your payroll on track through holiday disruptions. With automated filing reminders, early processing options, and flexible direct deposit scheduling, Payday ensures employees receive timely paychecks—even during the busiest times of the year.
Contact Payday today for reliable holiday payroll solutions that keep you on schedule!