Tax season here: What small businesses need to know about W-2s and 1099s
As businesses prepare to face their February 1, 2021 deadline, it’s time to review IRS requirements and make a plan. As a small business, the best way to be tax loyal is to inform and choose the best filing method.
Form W-2 is explained
Everyone who spends some time at work knows a thing or two about Form W-2. On behalf of the employer, Form W-2 is a report regarding employee wages and taxes withheld from employees’ pay checks.
Employers file these forms with the Social Security Administration (SSA) and provide their employees with a copy. Employees use their copy for income tax. Even if your business has only one employee on salary, you will need it File Form W-2 For the 2020 tax year.
When is W-2 due?
The deadline for Form W-2 is usually 31 January. When that date falls on the weekend, the IRS postpones it. This year, employers have until February 1, 2021 to file Form W-2 for the 2020 tax year. Businesses must send a copy to their employees by the February 1, 2021 deadline.
Form 1099-MISC explained
As the name suggests, Form 1099-MISC is used to report miscellaneous payments. The IRS recently updated this form so that it can no longer be used to report compensation to the unemployed. To pay the unemployed, employers can file Form 1099-NEC, but we can get it later.
Although reporting Baker’s compensation in the 1099-MISC form is no longer an option, there are plenty of payments to report your business for the 2020 tax year. IRS Form 1099-MISC provides a report:
- Royalty or broker payments in lieu of dividends above $ 10
- Prize or award
- Providing medical and healthcare
- The fishing boat is moving forward
- Attorneys have been paid
- Crop insurance income
If one of these payments rings an hour, it’s time to file Form 1099-MISC for the 2020 tax year.
When is Form 1099-MISC submitted?
Form 1099-MISC There are several different deadlines depending on your filing procedure. If you file Form 1099-MISC on paper, your deadline is March 1, 2021. If you e-file, you have until March 31, 2021 For both options, all recipients must pay a copy by February 1, 2021
Form 1099-NEC explained
If your business has reformed, hired a job, or completed another service, you may need File Form 1099-NEC. Form 1099-NEC is a requirement for employers who have paid more than $ 600 to an independent contractor or unemployed in the 2020 tax year.
Upon filing Form 1099-NEC, employers must send a copy of their return to their recipient before the IRS deadline. Non-employees or independent contractors who have paid $ 600 or more are recipients.
When is Form 1099-NEC due?
Form 1099-NEC will expire on February 1, 2021 To meet this deadline, file Form 1099-NEC with the IRS and provide non-employee copies by February 1.
Make it easy to meet your IRS deadlines
Now that you have more information about your IRS requirements and due dates, it is time to determine your filing procedure. The IRS recommends e-filing. E-filing is a great option for small businesses because it is fast, secure and efficient.
E-filing lends itself quickly to IRS processing, which means less time to wait for your business. E-filing is also faster because it reduces delays associated with postal mailing such as mailing lag time and trips to the post office.
Tax software can help your business
Now more than ever, smart employers are using technology to get big results while running a small business. Working with an e-filer is a great option, which allows businesses to make their filing process faster, safer and more efficient. Small businesses can bring ease and efficiency to their tax while still doing it themselves.
It is important to be prudent when choosing the best filing solution for your business. Here are some things to look for. Pay attention to the price, whether the tax solutions support and, most importantly, whether they are IRS-approved. Some e-file providers charge more without offering all the features that can make tax season really easy.
Completing the form correctly, without mistakes and typo, is an important part of avoiding IRS penalties. If you choose an e-file provider that offers internal audit or error testing, you reduce the risk of last-minute errors.
Selecting an IRS-approved e-file provider is an important part of avoiding scams. A stamp of approval from the IRS ensures that your forms are submitted securely and in the correct format.
Meeting all your deadlines this tax season is the best way to stay healthy as a small business. Be sure to file Forms W-2, 1099-NEC, and 1099-MISC by February 1, 2021.
Author – Gabriel Girard | Marketing
Gabriel Girard is a content writer at ExpressEfile, a span enterprise product that offers easy, hands-on e-filing at the industry’s lowest prices. Employers can inspect ExpressEfile.com To meet their IRS and SSA requirements for the February 1, 2021 deadline and to receive all support they need.
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