A major aspect of running payroll for your small business is all the payroll forms both you and your employees need to complete in order to ensure you pay everyone properly and withhold the right amount in taxes. And the first step to maintaining all the paperwork is to make sure you know which forms you are responsible for.
It’s important to know this information because the IRS does not take employment taxes lightly. If you file your payroll taxes incorrectly, you could face serious fines and penalties. The truth is that payroll tax forms are confusing due to the different due dates and instructions.
Let’s break down each payroll form you need to know so you can ensure you know when each form is due, especially if you aren’t using a payroll service to help you.
What is a payroll form?
A payroll form is used to report payroll taxes for your business and employees. With the forms, you provide the IRS with a report of the money you have paid your employees, the taxes you have withheld, and the taxes your business has paid.
What are the different payroll forms to know?
There are several forms you’ll need to submit in order to stay compliant on both the federal and state level.
IRS Form W-4 helps you figure out how much federal income tax to withhold from each employee’s paycheck. When you hire a new employee, they’ll need to complete a W-4 before they start their first day on the job.
These forms can also be updated by your employee if a “qualifying life event” occurs, like having a child or getting married. When these types of events take place, their withholding allowance may change.
Note: You do not need to submit this form to the IRS, but it’s important to keep the forms saved in your files in case you undergo an audit.
Forms W-2 and W-3
Form W-2 is a wage and tax statement that is used to report how much you are withholding from each employee in payroll taxes. Unlike the W-4, you need to file Form W-2 with the Social Security Administration each year by February 1. By the same date, you are must also to send a copy to your employees.
When you submit the W-2, you will also submit a Form W-3 with it. This form summarizes the totality of the W-2 forms. It reports the total amount of payroll taxes you withheld from your entire team, as well as the total amount of paid employee wages. Don’t worry about sending a copy of the W-3 to your employees, the government does not require it.
Form 941 gives a report of your quarterly IRS payroll tax payments. When filling out this form you will need to say how much in federal income tax and FICA tax you withheld from each team member for that specific quarter. You’ll also report how much FICA tax your business is paying for the quarter.
There are a few types of employers who do not need to file this form with the IRS, including:
- Businesses that have filed final quarterly federal tax returns
- Seasonal businesses
- Businesses that hire household or farm employees
Form 941 is usually due on the last day of the month that follows the end of the quarter. For example, the form is due on April 30 to report wages paid January through March.
Form W-9 is a payroll form used by small businesses that pay independent contractors in addition to their employed team. The independent contractor uses the form instead of the W-4 to give employers their social security number or taxpayer identification number.
The form does not include tax withholding information because you don’t withhold taxes from your independent contractors’ paychecks.
You do not need to submit Form W-9 to the IRS, but as with Form W-4, you need to file the forms in your records.
Form 1099-NEC is also an independent contractor payroll form and is used instead of Form W-2. The IRS form reports how much you paid the independent contractor. The deadline to submit Form 1099-NEC to the IRS and to your independent contractors is February 1.
State tax withholding certificates
The government uses state tax withholding certificates to determine how much in state payroll taxes you should withhold from each team member. Different states have different requirements, and some states do not require you to pay income taxes at all, meaning your state tax liability lies only with state unemployment insurance.
Take a look at this chart to determine if your state requires tax withholding or not.
Need some help with payroll forms?
Homebase payroll is the perfect solution. Your timesheets instantly convert into hours and wages. When you run payroll, Homebase calculates taxes and paychecks, sends direct deposits to your team, and automatically pays and files your payroll taxes. Plus, your employees get on-demand access to their pay stubs, W-2s, and 1099s in the Homebase app.
Furthermore, when you hire an employee, Homebase can help by sending new hires an onboarding packet. They’ll receive every piece of paperwork needed to keep your business compliant with IRS regulations.