Start of Year Payroll Mistakes — and How to Avoid Them

The start of a new year is a fresh slate — but in payroll, it’s also where we see a few common issues pop up again and again. The good news? Most of them are easy to avoid with a little preparation and the right support.

At APlus, our goal isn’t to point fingers. It’s to help you start the year confidently, avoid surprises, and keep payroll running smoothly.

Here are the most common payroll mistakes we see at the beginning of the year — and how to stay ahead of them.

1) Outdated Employee Information

One of the most common issues we see is simple but important: employee information that hasn’t been updated.

This can include:

  • Address changes

  • Name changes

  • Tax withholding elections

  • Work location updates for remote employees

Why it matters: Outdated information can lead to incorrect tax filings, reporting issues, or delays when forms are issued.

How to avoid it:
Start the year with a quick employee information review. Encourage employees to update their details through self-service — or reach out to your APlus Client Support Specialist (CSS) if you need help reviewing records.

2) Missed Tax and Wage Updates

Each January brings new tax limits and wage thresholds. If these aren’t updated correctly, payroll errors can show up quickly.

Common examples:

  • Social Security wage base increases

  • Updated retirement contribution limits

  • State or local minimum wage changes

Why it matters: Incorrect settings can affect both employee pay and employer taxes.

How to avoid it:
Make sure your payroll system automatically applies new limits. With APlus, these updates are handled for you — but it’s always smart to review your first payroll of the year together.

3) Employee Classification Issues

The beginning of the year is a common time for role changes, new hires, or adjustments in responsibilities. If payroll classifications aren’t updated to match, problems can follow.

Watch for:

  • W-2 vs. 1099 misclassification

  • Exempt vs. non-exempt status changes

  • Overtime rules not applied correctly

Why it matters: Classification errors can lead to compliance issues and costly corrections.

How to avoid it:
If a role changed in the last year, take a moment to confirm it’s set up correctly in payroll. When in doubt, ask — we’re always happy to review it with you.

4)  Benefits and Deduction Errors

Open enrollment changes often go into effect at the start of the year, and this is another area where small errors can sneak in.

Common issues include:

  • Missing or incorrect benefit deductions

  • Retirement contributions not updated to new limits

  • Employees enrolled in the wrong plans

Why it matters: Even small deduction errors can erode employee trust.

How to avoid it:
Review your first payroll carefully and confirm deductions match your enrollment elections. If something doesn’t look right, your APlus team is just a call or email away.

5)  ACA Tracking Gets Overlooked

For growing businesses, ACA compliance can quietly become a problem if tracking isn’t handled throughout the year.

Early-year mistakes often include:

  • Not tracking hours for variable or part-time employees

  • Assuming ACA doesn’t apply yet

  • Waiting until year-end to review data

Why it matters: ACA penalties are easier to prevent than fix.

How to avoid it:
Even if you’re unsure whether ACA applies, it’s smart to track now. We help clients monitor ACA data all year long — not just during filing season.

7) Final Pay, PTO, and Special Payrolls

The start of the year often brings bonuses, PTO payouts, or employee departures — all of which require extra care in payroll.

Common mistakes:

  • Bonuses taxed incorrectly

  • PTO payouts not handled according to state rules

  • Final paychecks issued late

Why it matters: These situations are time-sensitive and regulated.

How to avoid it:
Let us know before running special payrolls. A quick conversation can prevent headaches later.

Start the Year Strong

Payroll mistakes don’t happen because business owners don’t care — they happen because payroll is complex, and changes happen fast.

A short check-in at the start of the year can help you:
✔ Catch small issues early
✔ Avoid corrections and penalties
✔ Keep your employees confident and paid correctly

If you’re an APlus client, reach out to your CSS — we’re happy to review how you’re doing things. If you’re exploring new payroll options, we’d love to show you how personal support makes all the difference.

This blog does not constitute formal HR or legal advice. Our HR Resource Center by Mineral offers further guidelines for this and many other topics. For a small additional fee you can also speak to a live HR Specialist. Contact your friendly APlus Payroll CSS for further information (including login details) or login here. Want to know how we can help your Payroll or Time & Labor process? Please contact us here. Consultation is friendly and free!