There are close to 40 tax forms listed on IRS.gov that fall under the ‘filing and paying business taxes’ section. And the IRS even mentions it’s not all-inclusive. Much of what you’re required to fill out and file depends on several categorizations including things like: if you’re an LLC or an S-Corp, which state you reside in, if you have employees in other states, if you offer benefits, or donate to charity.
Feel overwhelmed? The good news is, we’ve broken down some of the most common federal payroll tax forms you’ll need to stay compliant.
While the following list includes federal forms, keep in mind that you should pay close attention to what state/jurisdictions you process payroll in. It’s a good idea to always have your tax ID number, and a listing of employees with their critical data (Social Security number, address, date of birth, etc.) on hand so you’re prepared for these forms.
Now, onto the list.
What tax forms does my small business need?
We’ll start at the beginning. Form SS-4 is used to apply for an employer identification number (EIN) for tax filing and reporting purposes. An EIN consists of nine digits, and is assigned to employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities.
Find Form SS-4 here.
The federal Immigration Reform and Control Act (IRCA) requires employers to hire only individuals who may legally work in the United States.
Form I-9 is required for all U.S. employers to verify the employment eligibility and identity of each employee hired to work in the U.S. (including U.S. citizens). Employees are directed to complete the first section of the form. Employers must complete the second and third sections if necessary.
Unlike Forms W-2 or other IRS documents, employers must keep completed Forms I-9 on file for each person on their payroll. Forms I-9 must be stored with the employer for three years after the date of hire or for one year after employment is terminated (whichever is later).
It must be available for inspection by authorized U.S. government officials from the Department of Homeland Security, Department of Labor or the Department of Justice.
This tax return document is somewhat similar to a W-2. However, a W-2 reports wages and taxes withheld, and the 1099-MISC reports payments made to non-employees. Some even refer to a 1099-MISC as the independent contractor’s W-2.
While the form 1099-MISC will report non-employee compensation, vendors won’t withhold income taxes like they would with W-2 employees.
The specifics from the IRS regarding Form 1099-MISC are that payers use it to:
- Report payments made during a trade or business to a person who’s not an employee or to an unincorporated business.
- Report payments of $10 or more in gross royalties.
- Report payments of $600 or more in rents or compensation.
- Report payment details to the IRS as well as the person or business that received the payment.
This form also pertains to independent contractors. Contractors should complete Form W-9 to provide you with their correct Taxpayer Identification Number (TIN) so that you can report on how much you pay them.
The IRS explains a contractor fills out a Form W-9 so that you can report:
- Income paid
- Real estate transactions
- Mortgage interest
- Acquisition or abandonment of secured property
- Cancellation of debt
- Contributions made to an IRA
Form 945 is also known as the Annual Return of Withheld Federal Income Tax. This form should be used to report withheld federal income tax from nonpayroll payments.
- Pensions (including distributions from tax-favored retirement plans) and annuities
- Military retirement
- Gambling winnings
- Indian gaming profits
- Voluntary withholding on certain government payments
- Backup withholding
Find Form 945 here.
Form 940 is used to report your annual Federal Unemployment Tax Act (FUTA) tax. What’s that? As the IRS explains, the FUTA tax (as well as state unemployment systems) provides funds for paying unemployment compensation to workers who have lost their jobs.
Most employers pay both a federal and state unemployment tax; only employers pay FUTA tax. Employers should not collect or deduct FUTA tax from employees’ wages.
Everyone should probably know what a Form W-2 is, but here’s a bit of detail for a refresher. If you’re an employer engaged in trade or business who pays wages, including noncash payments of $600 or more for the year for services an employee performed, you must file a Form W-2 for each employee from whom:
- Income, Social Security, or Medicare tax was withheld.
- Income tax would’ve been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4.
Curious as to what all the boxes and lines and numbers mean on a Form W-2? We have a comprehensive guide and chart for you here.
This form must be complete so that employers can withhold the correct federal income tax from employees’ pay. The IRS urges everyone to consider completing a new Form W-4 each year, especially when personal or financial situations change. This has become even more imperative following new withholding tables released as a result of the Tax Cuts and Jobs Act.
We wrote up a guide on checking withholding for you here.
Form 941 is known as the Employer’s Quarterly Federal Tax Return. This is used to report wages you’ve paid and tips your employees have reported to you. It’s also used to report the following employment taxes: federal income tax withheld, Social Security and Medicare taxes withheld, and your share of Social Security and Medicare taxes.
You must file a separate Form 941 for each quarter. The breakdown goes like this:
- First quarter – January through March
- Second quarter – April through June
- Third quarter – July through September
- Fourth quarter – October through December
Typically, this form is due by the last day of the month following the end of the quarter. Ex. April 30 for wages paid in the first quarter.
Note – If you have a small payroll, you might file an annual return, Form 944 each quarter instead, but only if you’ve been notified by the IRS to do so. The IRS explains that Form 944 is for employers with an annual employment tax liability of $1,000 or less.
Note that this form only applies when you sign up for payroll services that include tax filing. Form 8655, gives a reporting agent (like your payroll company) the ability to file forms and make payroll tax deposits on your behalf.
The IRS explains in more detail that you should use this form to authorize a reporting agent to:
- Sign and file and make deposits and payments for certain returns.
- Receive duplicate copies of tax information or notices regarding any authority granted.
- Provide the IRS with information to aid in penalty relief determinations that are related to the authority granted on this form.
Payroll and Tax Compliance with PrimePay
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