The end of the year is fast approaching. As an employer, you have a lot on your plate. When it comes to your business taxes, one task is most important. You need to prepare the W-2s for all of your employees.
The Form W-2, Wage and Tax Statement is required for all employees. It will break down their incomes and any income tax, social security or Medicare taxes that were withheld that year. A Form W-3, Transmittal of Wage and Tax Statements will then be used to transmit your final Forms W-2 to the Social Security Administration.
Preparing and filing W-2s for employees can be a complicated process, but it absolutely needs to be done right. Any discrepancies can cause issues when filing your final business tax returns with the IRS. If you don’t have a full-time CFO at your company, you may want to consider Outsourced CFO services from an accounting company like Ferguson, Timar & Company. We specialize in helping small businesses with their taxes, and Outsourced CFO services will provide all the benefits of an in-house CFO without the lofty salary.
Whether you outsource your CFO services or do everything yourself, here is a basic to-do list that will help you when preparing W-2s, W-3s and other employment tax forms at the end of this year and the beginning of next year.
Federal Income Taxes
By using the employee’s Form W-4 and withholding tables, you must withhold and deposit Federal Income Tax.
State Income Taxes
Just like Federal Income Tax, you will need to withhold and deposit the individual employees’ State Income Tax.
Social Security and Medicare Taxes
In general, employers must withhold and deposit Social Security and Medicare taxes.
Additional Medicare Tax
As of 2013, there is a 0.9% Additional Medicare Tax that also must be withheld.
Federal Unemployment Tax (FUTA)
The FUTA is reported and paid separately from Federal Income, Social Security and Medicare Taxes. It is paid from your own funds and employees will not have it withheld from their pay.
Self-Employment Tax (SE Tax)
If you work for yourself, there will be Social Security and Medicare Taxes that need to be withheld.