The best practice is to start the annual reconciliation after the:

Comprehensive and Detailed Explanation:Annual payroll reconciliationensures thatpayroll records match tax filings. Thebest practiceis tostart reconciliation after completing the W-2 audit, as this verifies:

Employee earnings and tax withholdings

Federal and state tax deposits

Year-end adjustments

Option Bis incorrect becausequarterly reconciliationis separate fromannual reconciliation.

Option Cis incorrect becausereconciliation should start after verifying W-2s, not just at the year-end.

Option Dis incorrect becausereconciliation should be based on the prior year, not the first payroll of the new year.