First comes hiring. Then comes onboarding. Then comes … happily ever after? Not quite.
If you have employees, you need to stay on top of all things payroll. And one of your big payroll responsibilities as an employer is withholding taxes and reporting said taxes to the proper government agencies.
What you need to know about payroll reporting
Payroll reporting can make your head spin. If it doesn’t, you’ve either been doing it a while, you have a knack for payroll, you’re doing it wrong, or you’re lying to yourself. But hey, no judgment here.
For those of you whose heads are spinning from all the requirements, read on.
1. Payroll reports are pretty darn important
Employers use payroll reporting to, well, report on employee wages and employment tax liabilities.
And when it comes to taxes, you know how important it is for the government to get their cut. In fact, even filing a payroll report late is grounds for getting slapped with a failure-to-file penalty.
So, file various payroll reports (which I’ll get to next) on time to summarize the following types of employment taxes:
- Federal income tax
- Social Security tax
- Medicare tax
- Federal unemployment tax
- State income tax
- State unemployment tax
- Local income tax
As you can see, these reports summarize a lot of payroll data. You’ll need to report both the taxes you contribute as the employer as well as the taxes you withhold from your employees’ wages. Use the government form that reports each type of tax.
You know what they say: So many taxes, so many payroll reports to use. Nope? Just me? Moving on…
2. There are a few types of payroll reports for business
You’ve got your federal, state, and local payroll reports. Let’s tackle federal payroll reports first, since these are the same for all employers.
Federal payroll reports you’re responsible for include the following:
- Form 941 or Form 944
- Form 940
- Forms W-2 and W-3
Form 941 or 944: To report employee wages and federal income, Social Security, and Medicare taxes, use either Form 941, Employer’s Quarterly Federal Tax Return, or Form 944, Employer’s Annual Federal Tax Return.
Form 941 is due to the IRS by April 30, July 31, October 31, and January 31. Form 944 is only due by January 31.
Do not file both Form 941 and 944. Form 941 and 944 report the same information. The difference between these forms is that one requires quarterly filing and the other annual filing. Unfortunately, you don’t get to go with the annual version because it’s only due once a year. You can only file Form 944 if your annual tax liability is $ 1,000 or less and the IRS tells you to.
Form 940: Use Form 940, Employer’s Annual Federal Unemployment Tax Return, to report your federal unemployment tax liability annually to the IRS.
Form 940 is due by January 31 each year.
Forms W-2 and W-3: To report annual wage and tax information for each employee, use Form W-2, Wage and Tax Statement. And, use Form W-3, Transmittal of Wage and Tax Statements, to summarize your Forms W-2 info. These forms don’t go to the IRS, though.
Send Form W-2 to your employees, the Social Security Administration (SSA), and state agencies (if applicable) by January 31 each year. And, send Form W-3 to the SSA with your Forms W-2.
State and local reports: These forms vary based on where your business is located. Although most states require you to submit state payroll reports quarterly, you should check with your state for specifics. The same goes for your local payroll reports, too.
3. Payroll reports and deposits may have different deadlines
When it comes to payroll taxes, you have to report them on the proper form and deposit them (aka remit the money) to the agencies. But, your deadlines for both responsibilities may be a little different.
Let’s take a look at the facts: Form 941 is a quarterly form that’s due four times per year. But when it comes to the money portion, you’re either a monthly or semiweekly depositor, depending on your tax liability during an IRS lookback period. That means you’ll be completing the form four times a year but making deposits at least three times as often.
Now, let’s look at Form 944. It’s an annual form that’s due one time per year. As is the case with Form 941, you’re either a monthly or semiweekly depositor. But for Form 944, depending on your tax liability, you may be able to deposit the money after the end of a quarter (if less than $ 2,500 for the quarter but more than $ 2,500 for the year) or even pay it with the return (if less than $ 2,500 for the year).
See? Different deadlines. And I’m not going to get into state and local reporting and deposit deadlines here (be sure to consult your state!). That means you need to stay on top of your reporting and deposit deadlines if you’re handling payroll on your own.
Which brings me to my final point…
4. You can make things easier on yourself
Payroll reporting (and depositing) doesn’t have to be a bear of a responsibility. You don’t need to remember to create payroll reports and remit the money on your own. In fact, you don’t have to do any of the reporting and depositing yourself with full-service payroll.
Like basic payroll software, full-service payroll gives you accurate calculations, payroll reports, and a streamlined way to pay your employees. But, full-service payroll takes your typical payroll software an extra step.
A full-service payroll provider also handles your payroll filings (e.g., Form 941), tax deposits, and year-end tax filings (e.g., Form W-2).
Using full-service payroll saves you time and headaches. And if you don’t believe me, look into a provider that offers a free trial so you can see how easy payroll reporting can be—when you don’t have to do it ever again.