Tax season is on its way and coming sooner than we think! If you are an employer, you know that you have some accounting to do early next year. With all the deadlines approaching, it can be easy to get a little frazzled. However, with the right knowledge and a skilled team working with you, you can have a smooth-sailing tax season. Check out these payroll tips for employers.
Employers need to first ensure that all their employees are IRS-compliant. Your tax forms concerning them will be meaningless and out of bounds with the law without this compliance. Make sure they each have an EIN (employer identification number) and proper classification.
Check for Data Accuracy
When filling out your W2 and other tax forms, it can be easy to make mistakes. Unfortunately, careless mistakes do happen, and businesses suffer penalties every year. These mishaps include easy-to-fix issues like misspelled names, checked boxes that shouldn’t be checked, and transposed numbers. Review your data carefully before submitting the forms.
Prepare Your Documents
Understand all the tasks you need to accomplish for tax season payroll as an employer. In this role, you are responsible to calculate federal and state income tax, Social Security, unemployment, and Medicare for the prior year.
File W2s before Business Taxes
As mentioned, businesses typically have numerous deadlines to deal with at the beginning of every year. Accounting experts recommend filing your W2, 941, 940, and 1099 forms if applicable first before dealing with business taxes, since these forms have strict deadlines with no extensions and undesirable penalties if missed.
Calculate Payroll Write-Offs
Meanwhile, you’ll also need to calculate payroll expense write-offs, which qualify your tax deductions. These expenses include:
- Wages that qualify as an ordinary, necessary business expense, such as office supplies.
- Contributions to Medicare, Social Security, and unemployment
- Commissions and bonuses
- Cash awards
- Paid vacation and sick days
- Travel expenses
- Contracts over $600
Keep Appropriate Records
According to the IRS law, you will need to safely store your tax records for a certain amount of time. Employers should keep tax records for three years and employment records for four years. With these records on hand, you’ll be prepared if the IRS or your state performs an audit on your company. To help you with every step of the process, from getting the right forms to mailing them on time to keeping them secure, FORMost Graphic Communications is here to help!
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