What New Small Businesses Need To Know About W-2s
It's the start of a new year, which means that it is time for your company to send out W-2s to employees. If you've never had to do this before, then it can be a bit overwhelming. Here are a few things that you need to remember regarding W-2 forms:
Do You Have to File W-2s with the IRS?
Probably so. According to the IRS, if you paid an employee over $600 for product, service, trade or any type of business, then you must file the form if you took out taxes for the employees or would have held out federal taxes had it not been for the employee being exempt from withholding.
What Must You Include on the Form?
When you first look at a W-2 form, you may feel overwhelmed. Sure, you've seen them, but you've always been on the receiving end of them. This year, you're sending them, and you need to make sure you do it right. You do not have to fill out every single box on the form. All that you really need to fill out is your business information, the employee's personal information, the total wages, and the amount that was withheld (this includes taxes, Social Security and Medicare).
Where Do You Send the Completed W-2s?
You will need to file the completely filled out W-2 forms with the United States Social Security Administration. You can file them electronically online or you can mail them. In addition, depending on local laws, you may need to send a copy of the form to your local, city or state tax department. Then, of course, one copy must be sent to your employee. Don't forget to also keep the final copy for your own personal records.
Is It a Problem If You Are Actually Late in Your Filing?
If spending unnecessary money is a problem, which it most likely is, then the answer is yes. The IRS states that if you fail to miss the paper copy deadline of February 29, 2016, or the e-filing deadline of March 31, 2016, then you could be assessed a fine for every form that you file late. The late penalty can range anywhere from $30 to $100, depending on when you finally file the forms.
Is There Any Way to Bypass the Penalties?
Yes, but only if you file for an extension on the W-2 filing deadline. Form 8809 from the IRS allows you to do this and will help you avoid being penalized. You can file this form online. However, keep in mind that this form only gives you 30 extra days. If you don't file within that 30-day extension, then you will receive a penalty for each form that is not filed.
If you need to find out more about taxes and running a small business, consult with an experienced tax accountant (such as one from Herman & Cormany).