Here's your guide to the must-dos that deserve a spot on your Q1 calendar.

The start of a new year always comes with a fresh wave of energy and a long list of tasks. For anyone running a business or an HR team, Q1 is the time to wrap up last year’s reporting, get ahead of new compliance rules, update payroll systems, and make sure your benefits and policies are compliant with 2026 requirements. It’s a lot, but with a thoughtful checklist, you can keep everything on track and avoid a last-minute scramble.

Tackle These Tasks 

PAYROLL & TAX

✅Prepare for an Extra Payday. In 2026, employers that pay biweekly will face a 27th payday. Prevent budgeting surprises by adjusting your payroll system (including plans for deductions) and notifying employees about these changes. Be sure to check state laws, as some states have mandates for handling this additional payday.

✅File FICA and FUTA. Form 941 for Q4 payroll taxes (FICA) and Form 940 for federal unemployment taxes (FUTA) are due Feb. 2, 2026. If you made all FUTA deposits on time throughout 2025, you have until Feb. 10, 2026, to file Form 940.

✅File Forms W-2 and W-3. For the 2025 tax year, employers must file Forms W-2 and W-3 with the IRS and Social Security Administration and distribute W-2s to employees by Feb. 2, 2026.

✅Prepare for New Overtime Reporting Rules on Form W-2. Starting with the 2026 tax year, employers will need to break out overtime pay differently on W-2s. The IRS has added new codes to report the FLSA-required portion of overtime that qualifies for the “No Tax on Overtime” deduction, which is available through 2028. This deduction allows eligible employees to subtract the premium portion of properly classified overtime from their taxable income. The IRS has released draft forms, so start building this requirement into your payroll system now.

✅File Form 1099-NEC for Non-Employee Compensation. If you paid contractors, freelancers, partnerships, estates, or corporations $600 or more in 2025, you must file Form 1099-NEC. File and distribute forms to recipients by Feb. 2, 2026.

✅Prepare for Big Changes to 1099 Reporting. Beginning with payments made after Dec. 31, 2025, the One Big Beautiful Bill Act (OBBBA) raises reporting thresholds: 1099-NEC & 1099-MISC apply at payments of $2,000 or more, and 1099-K applies to $20,000+ in gross payments and more than 200 transactions via third-party payment networks (PayPal, Venmo, etc).

🎯If you rely on gig workers or online payment platforms, these changes may significantly affect your reporting.

✅Minimum Wage Increases. Many states will increase minimum wage rates on Jan. 1, 2026. Check the Department of Labor’s resources or your state agency to confirm new hourly requirements for each location where you employ workers. Multi-state employers must watch this closely.

COMPLIANCE

✅Review OBBBA Compliance Requirements. The One Big Beautiful Bill Act includes new tax credits, expanded benefits, and reporting update. Most provisions start after Jan. 1, 2026, so Q1 is the perfect time to:

🔸Meet with your tax advisor, employment attorney, payroll team, or PEO
🔸Identify new credits or relief options
🔸Update internal processes to stay compliant

🎯Because rules continue to evolve, keep an eye on IRS updates and guidance throughout the year.

✅Update Federal and State Labor Posters. Every workplace, physical or virtual, must have updated and accessible labor law posters.

This includes:

🔸Federal Posters
🔸State-specific Posters
🔸Electronic Delivery for Remote Employees

Check for changes in FMLA, EEOC, and wage-and-hour posting requirements.

✅Post OSHA Form 300A. If your business falls under OSHA recordkeeping rules, post your Form 300A, Summary of Injuries and Illnesses, in a visible location from Feb. 1 through April 30, 2026. Certain high-risk industries must also file electronically by March 2, 2026.

✅Check Required Compliance Training. Review all required training based on:

🔸Your State
🔸Your Industry
🔸Your Federal Obligations

This can include harassment training, workplace safety training, cybersecurity awareness, and industry-specific certifications.

➡️➡️READ MORE: Navigating Compliance Minefields

✅Audit FTEs and Prepare ACA Reporting. Under the Affordable Care Act (ACA), employers are responsible for providing affordable healthcare coverage, and the reporting requirements vary based on the number of full-time equivalent employees (FTEs).

To determine if your business is an Applicable Large Employer (ALE) and must comply with ACA's coverage, affordability, and reporting requirements, audit your FTEs for each month of 2025 to determine if you have reached or exceeded 50 full-time and/or full-time equivalent employees.

ALEs that fail to provide full-time workers with minimum essential coverage that meets the affordability threshold are subject to two penalties, referred to by the IRS as shared responsibility payments. 

Key dates:

🔸March 2, 2026: Distribute 1095-C to full-time employees

🔸March 31, 2026: Electronic filing of 1094-C and 1095-C (required for employers with 10+ information returns)

✅Review Changes to Benefits Reporting. Check with your benefits broker to ensure you’re meeting notice requirements, including with Medicare Part D, HIPAA privacy rules and CHIPRA notices, and any new 2026 plan-year reporting obligations.

BENEFITS

✅Prepare Form 5500 (ERISA Plan Report). If your health plan has 100+ participants on the first day of the ERISA plan year, you must file Form 5500 with the Department of Labor.

🎯Remember, ERISA plan years may differ from insurance policy years.

✅Submit Medicare Part D Disclosure. If you provide prescription drug benefits to Medicare-eligible individuals (employees or dependents), you must disclose whether your coverage is creditable or non-creditable. This filing is due to CMS 60 days after the start of each plan year, regardless of whether your plan is primary or secondary to Medicare.

GENERAL HR

✅Conduct a Job Posting Audit. Pay transparency laws keep expanding, and many states now require employers to disclose salary ranges, bonus opportunities, and details about benefits. If you hire remote workers, assume applicants may come from states with strict pay transparency rules.

➡️➡️READ MORE: HR HELP WANTED: In-house Team or PEO Partner

✅Run a Pay Equity Audit. Review compensation components to ensure there is no unintended
wage disparity. Seek legal counsel to help mitigate risk if you find areas of concern.

✅Monitor State-Level Law Changes. If you operate in multiple states or hire remote workers, you must stay on top of new 2026 rules for:

🔸Paid Leave
🔸Minimum Wage
🔸Payroll Taxes
🔸Hiring & Background Checks
🔸Worker Classification

🎯Setting up a quarterly compliance audit can help you avoid surprises.

✅Plan for Employee Appreciation Day. Employee Appreciation Day is Friday, March 7, 2026. Plan something meaningful, whether it’s extra PTO hours or an in-office celebration. 🎯Small gestures go a long way.

START STRONG, STAY AHEAD

Q1 can feel like a whirlwind, but it's also the perfect opportunity to set the tone for the rest of the year. 

Staying on top of tax filings, legal updates, benefit reporting, and HR planning not only keeps your business compliant but also builds trust with employees and reduces the risk of costly surprises. 

If you need help, we've got you covered. Depending on your business and industry, your HR checklist may be different and even more complex. As an IRS-certified Professional Employer Organization (PEO), Propel HR has been a leading provider of Human Resources and payroll solutions for more than 25 years. We partner with small to mid-sized businesses to manage payroll, employee benefits, compliance, and risks, and other HR functions in a way that maximizes efficiency and reduces costs.

We can help you navigate what's next in Q1 and beyond. Just give us a call at (800) 446-6567 or to learn more visit www.propelhr.com. With preparation, 2026 can be your best year yet! 🎉

PLEASE NOTE: This information is for general reference purposes only. Because laws, regulations, and filing deadlines are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits advisor regarding your responsibilities. In addition, your business may be exempt from certain requirements and/or be subject to different requirements under the laws of your state. (Updated Dec. 10, 2025)