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Which Payroll Forms Do Employers Need?

Which Payroll Forms Do Employers Need

Find out all you need to know about the forms that payroll professionals like small businesses must fill out or obtain. Also, learn how payroll software can help.

  • You must file certain forms for payroll by the deadline set by the IRS. Failure to comply with this deadline can lead to penalties and fines.
  • You can also use the payroll forms to help you with financial planning and record keeping.
  • There are 12 main payroll forms that cover employee and contractor wages, taxes, and employer-provided insurance.
  • This article was written for small business owners who want to manage their payroll forms.– Ben Franklin once said that death and taxes were the only certain things in life. Business owners need to be prepared for any tax bills. It is essential (and legally required!) to keep business tax paperwork, also known as payroll forms. This guide will help you understand the forms that you as an employer need and when you should use them.

Payroll forms are vital

All employers must keep payroll forms, which are federally required documents. Failure to file them could result in costly fines and penalties. Even if all paperwork is completed correctly, errors can result in additional penalties. They can even lead to lengthy and costly tax audits in extreme cases.

Payroll forms also confirm that your calculations have been correctly recorded. If you create a report on your annual employee payments, and it doesn’t match your quarterly reports then you will know that something is wrong. The error can be identified and corrected before it leads to further mistakes.

Different types of payroll forms available for employers

Below is a table that summarizes the most important types and uses of payroll forms. Below the table, you will find detailed explanations for each form.

Formula W-4

W-4 forms will determine the federal income tax rate of your employees. The employee’s wages will be withheld from your paychecks. This payment will not be remitted immediately. Instead, you’ll send all quarter-end payroll taxes to the IRS in one batch. Keep a copy of the W-4 forms from your employees on file to verify your payroll calculations.

On or before your first day at work, have employees complete W-4 forms. The form is simple and requires very little information. This shouldn’t take more than five minutes. W-4 forms should only be used by employees. Contractors must fill out a separate form. This form will be explained soon. However, we recommend that you first review the differences in employees and contractors.

Formula W-2

Every employee should be provided with a W-2 form which summarizes how they used their W-4 to withhold taxes for the year. This form will show the employee’s gross wages as well as any taxes withheld. The form must be sent to the employee by January 31st of the next calendar year.

Six copies of the W-2 form for each employee are required. The following are six copies of each employee’s W-2 form.

  1. To submit to the SSA
  2. Personal records of the employee
  3. To be included with federal tax returns by the employee
  4. To be included with the state and local tax returns of the employee
  5. You must submit your tax returns to your local and state tax authorities
  6. Keep track of your business records

Formula W-3

The W-3 summary of all W-2 forms for your employees. This form shows the total wages and withheld taxes for all employees. This form allows you to double-check your numbers by adding all gross wages of employees. The sum should match your W-3. You can file one W-3 form with the SSA along with all W-2 forms. Keep a copy for your records.

Formula W-9

The W-9 form is the equivalent to the W-4 form for contractors. The form will not ask contractors for their withholding because you don’t deduct taxes on contractor payments. Only basic information is required, including a Social Security number and indication of the type of their business entity, if any. After accepting their first assignment, contractors should file their W-9 forms. [Read similar article: What are W-9 and 1099 Tax Forms]

Form 1099-NEC

Form 1099 -NEC, which is similar to Form W-9, is the equivalent of Form W-4. You must send a 1099-NEC to every contractor who has paid you at least $600 in a calendar year. You must include the amount you paid to each contractor in every 1099-NEC. The deadline for six copies of each 1099-NEC form, just like W-2 forms is January 31st.

Notice that Form 1099-NEC, which is relatively new, is required. It replaced Form 1099-MISC as tax year 2020. It was previously used for another purpose, and then it was put aside (until now).

Formula 940

You must file IRS form 940 if your company is required to file and pay federal unemployment taxes. If your total gross wages exceed $1,500, you will know that your company must pay FUTA tax. If you employed at least one person during the past year, you must also pay FUTA tax. You must pay FUTA taxes in quarterly installments if your total FUTA taxes exceed $500.

The 940 form will show the total FUTA taxes paid in the relevant tax year. It must be filed by January 31st of the next year.

Formula 941

Form 941 must be completed by small businesses that withhold federal income tax and FICA taxes. This form will be filed quarterly to show how much payroll taxes you withheld from all employees for each quarter. It is important to do accurate calculations because the IRS will cross-check your Form W-3 with your 941 forms when you file it.

You’ll need to indicate the following information on your 941 form:

  • All employees – Total gross wages
  • Federal income tax withholding
  • FICA tax withholding
  • Additional tax withholding
  • Reported tips
  • There are several types of adjustments available, depending on the situation

The last day of each month following the quarter’s end is your due date for the quarterly 941 form. You have until April 30, for example, to file your Q1 941 forms since Q1 runs from January 1 through March 31.

Formula 944

Sometimes, small businesses can file IRS form 944 every year instead of quarterly 941 forms. This applies only to small businesses that have a maximum FICA or federal income tax liability of $1,000. It is extremely rare that you will need Form 944 rather than Form 941.

The IRS will inform you if you areamong those rare businesses that can swap 941 forms for 944 forms. The form must be filed by January 31st of each calendar year. The same information will be included on Form 941 but in a shorter format that is more suitable for small tax liabilities.

Form 1095-B

Form 1095B informs the IRS about any self-insured health plans you offer to your employees. You may not offer this type plan if your business is smaller. Self-insured health plans are insurance plans your company offers, rather than purchasing insurance from a third party. Many universities have their own insurance plans, which they offer to their students and employees. These plans can be self-insured.

You will need to send each employee Form 1095B if your company’s health insurance plans are truly self-insured. This will list the months you covered each employee. Keep a copy of this form for your records. Send two copies to employees – one for each their tax returns and one for their records – no later than January 31. Your 1095-B form must be sent to the IRS by February 28. You have until March 31 to e-file your 1095-B form with the IRS.

Form 1094-B

Form 1094B summarises all of your W-2 forms. It contains your contact information as well as the total number 1095-B forms that you have filed. Your 1094-B Form should be filed with all 1095-B forms.

Form 1095-C

Form 1095C must be filed if your company employs at least 50 employees. You will generate a 1095C form for each employee, just like Form 1095B. This form will list the month the employee was covered, as well as the required monthly contribution. This form must be completed by all employees, even those who do not have coverage.

Your employees must have their 1095-C forms received by January 31. All forms must be received by the IRS via post by February 28th or electronically by March 31st.

Form 1094-C

Form 1094 – C is to form 1095-C as Form 1094 – B is to form 1095-B. It is a summary form. It can be used to track the number of 1095 C forms you have filed and your applicable Large Employer (ALE) member information. You’ll need to list all members of your aggregated ALE group. When you file your 1095C forms, Form 1094-C must be filed.

Don’t worry if all this paperwork seems overwhelming. There is an easy way for you to manage them all.

Payroll software for managing payroll forms

To ensure compliance with business taxes, all small business owners need to be familiar with the 12 forms. However, knowing the details doesn’t mean you have to do tedious calculations or fill out lengthy forms. Payroll software automates all of that. It turns your tax and wage records into payroll forms in just a few mouse clicks.

Even if you have a complex payroll, there is still a perfect payroll software provider. We recommend ADP for this purpose. Read our review on ADP payroll software. Our Square Payroll review will help you get your taxes in order. For more suggestions, check out our reviews of the top payroll software providers. You can now execute your payroll and taxes with no hassle.

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