How To Maintain IRS Compliance As a Business Owner

A couple of months ago we shared some detailed information on our sister site, TaxBandits, about tax forms that businesses should be aware of.

We received such a great response that we wanted to share with you! 

How To Maintain IRS Compliance As a Business Owner:

Running a small business and handling tax filings for payroll purposes can be somewhat of a challenge. Most small business owners are curious to know which forms are they are required to file to maintain IRS compliance. Here are the 7 IRS forms business owners need to know in order to stay IRS compliant.

7 IRS forms business owners need to know in order to stay IRS compliant

Form 1099-MISC

Form 1099-MISC, the Miscellaneous Information Return is used to report income for services performed for a business by an individual not classified as an employee. Miscellaneous income can include payments made to subcontractors, rental payments, or substitute payments in place of dividends. Non-employees compensated $600 or more must be reported on Form 1099-MISC for the year which services were rendered.

Form 1099-MISC must be filed with the IRS by employers, and a copy of the Form must be provided to the recipient as well.

Form 1099-MISC Overview Filing Deadlines:

  • Due to the Recipient by January 31, 2018
  • Paper file with the IRS by February 28, 2018
  • E-file with the IRS by April 2, 2018

Form W-2, Wage and Tax Statement

Form W-2 is used as a payroll or employment tax return that is filed with the Social Security Administration for employees that have social security, income, or Medicare tax withheld from their income.

A W-2 Form must be filed by employers annually for IRS compliance and are required to send a copy of the Form to their employees to report salary and other compensations offered throughout the year for personal income tax return purposes.

Form W-3, Transmittal of Wage and Tax Statements

Form W-3 is a transmittal form that reports the total earnings, social security wages, Medicare wages, and tax withholdings for your employees during the tax period.

To make things more convenient for you, TaxBandits will automatically generate Form W-3 for you, based on the information you provide on your Form W-2, and send it to the SSA. 

Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return

Form 940 is used to report funds paid towards FUTA. Unsure of what FUTA is? Well, let’s find out now. FUTA (Federal Unemployment Tax Act) are funds which are used by the federal government to pay unemployment compensation to workers who have lost their jobs.

Only employers are responsible for paying this tax as FUTA tax is NOT deducted from employees’ wages. The FUTA tax only applies to the first $7,000 employers pay to each worker during the calendar tax year after subtracting any payments exempt from FUTA. 

Form 941, Employer’s Quarterly Federal Tax Return

Form 941 is used to report employment taxes and is filed quarterly by business owners with employees to report federal income tax, social security tax, and Medicare tax withholding’s from each employee’s salary.

This form is also used to calculate the employer’s portion of Social Security and Medicare tax.

Form 941 Quarterly Deadlines:

  • First Quarter (January to March) – April 30
  • Second Quarter (April to June) – July 31 
  • Third Quarter (July to September) – October 31
  • Fourth Quarter (October to December) – January 31

Form 1095-B, Health Coverage

Form 1095-B is used to report certain information regarding minimum essential coverage offered to employees.

This Form is typically used for IRS compliance by insurance providers, such as insurance companies, self-insured employers, employers with fewer than 50 full-time employees, and other agencies that provide health insurance coverage.

Form 1095-B Filing Deadlines:

  • Due to Recipient – March 2nd
  • Paper file with the IRS – February 28th
  • E-file with the IRS – April 2nd

Form 1094-B, Transmittal of Health Coverage Information Returns

Form 1094-B is the transmittal form that accompanies Form 1095-B when filing with the IRS each year. In conjunction with Form 1095-B, these forms are used to report the type of coverage offered by health care providers to individuals.

Form 1094-B also verifies if an individual and any of their dependents received (at least) minimum qualifying health insurance coverage from their provider during the calendar year.

Form 1094-B Filing Deadlines:

  • Due to Recipient – March 2nd
  • Paper file with the IRS – February 28th
  • E-file with the IRS – April 2nd 

Save this article and share with other business owners to ensure IRS compliance for years to come!

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