As companies get able to face their February 1, 2021 deadlines, it’s time to assessment IRS necessities and make a plan. As a small enterprise, one of the simplest ways to remain tax compliant is to learn and select the very best submitting technique.
Type W-2 Defined
Everybody who has spent a while within the workforce is aware of a factor or two about Type W-2. From the employer’s aspect, Type W-2 is a report on worker wages and the taxes withheld from worker paychecks.
Employers file these kinds with the Social Safety Administration (SSA) and supply their workers with a replica. Workers use their copy for earnings taxes. Even when your online business solely has one worker on the payroll, you will have to file Form W-2 for the 2020 tax yr.
When are W-2’s due?
The Type W-2 deadline is often January 31. When that date falls on a weekend, the IRS pushes it again. This yr, employers have till February 1, 2021 to file Type W-2 for the 2020 tax yr. Companies additionally have to ship their workers a replica by the February 1, 2021 deadline.
Type 1099-MISC Defined
As the shape title suggests, Type 1099-MISC is used for reporting miscellaneous funds. The IRS just lately up to date this way so it might now not be used to report nonemployee compensation. For funds to nonemployees, employers can file Type 1099-NEC, however we’ll get to that subsequent.
Although reporting nonemployee compensation is now not an possibility on Type 1099-MISC, there are nonetheless lots of funds your online business must report for the 2020 tax yr. IRS Type 1099-MISC offers a report on:
- Royalties or dealer funds in lieu of dividends exceeding $10
- Awards or prizes
- Medical and healthcare funds
- Fishing boat proceeds
- Funds made to attorneys
- Crop insurance coverage proceeds
If any of these funds ring a bell, it’s time to file Type 1099-MISC for the 2020 tax yr.
When is Type 1099-MISC Due?
Type 1099-MISC has a number of completely different due dates, relying in your submitting technique. In the event you paper file Type 1099-MISC, your deadline is March 1, 2021. In the event you e-file, you will have till March 31, 2021. For each choices, all recipient copies are due by February 1, 2021.
Type 1099-NEC Defined
If your online business made renovations, employed out a job, or had another service carried out, you could have to file Form 1099-NEC. Type 1099-NEC is a requirement for employers who paid an unbiased contractor or nonemployee greater than $600 through the 2020 tax yr.
On high of submitting Type 1099-NEC, employers have to ship a replica of their return to their recipient earlier than the IRS deadline. The nonemployees or unbiased contractors that you just paid $600 or extra are recipients.
When is Type 1099-NEC Due?
Type 1099-NEC is due February 1, 2021. To fulfill this deadline, file Type 1099-NEC with the IRS and supply nonemployees with copies by February 1.
Simplify Assembly Your IRS Deadlines
Now that you’ve just a little extra details about your IRS necessities and due dates, it’s time to decide your submitting technique. The IRS recommends e-filing. E-filing is a good possibility for small companies as a result of it’s quick, protected, and environment friendly.
E-filing lends itself to sooner IRS processing, which suggests much less wait time for your online business. E-filing can be sooner as a result of it cuts out delays related to postal mailings, akin to mailing lag occasions and making a visit to the publish workplace.
Tax Software program Can Assist Your Enterprise
Now greater than ever, sensible employers are harnessing know-how to get massive outcomes whereas operating a small enterprise. Working with an e-filer is a good possibility, permitting companies to make their submitting course of quick, protected, and environment friendly. Small companies can carry ease and experience to their taxes whereas nonetheless doing it themselves.
If you’re selecting the right submitting solution for your business, you will need to be discerning. Right here are some things to look out for. Take note of worth, whether or not the tax answer gives assist, and, most significantly, whether or not or not they’re IRS-authorized. Some e-file suppliers cost larger costs with out offering all of the options that may really make tax season easy.
Finishing kinds accurately, with out errors and typos, is a vital a part of avoiding IRS penalties. In the event you select an e-file supplier who gives inner audits or error checks, you cut back the hazard of last-minute errors.
Selecting an IRS-authorized e-file supplier is a vital a part of avoiding scams. A stamp of approval from the IRS ensures that your kinds shall be submitted safely and within the appropriate format.
Assembly all of your deadlines this tax season is one of the simplest ways to remain wholesome as a small enterprise. Don’t neglect to file Type W-2, 1099-NEC, and 1099-MISC by February 1, 2021.
Writer – Gabrielle Girard | Advertising and marketing
Gabrielle Girard is a content material author for ExpressEfile, a SPAN Enterprises product providing straightforward, hands-on e-filing for the bottom worth within the trade. Employers can go to ExpressEfile.com to fulfill their IRS and SSA necessities for the February 1, 2021 deadline and get all of the assist they want.