Save time at year-end by getting your payroll records in shape now
Tax Tip of the Week
October 17, 2016
Save time at year-end by getting your payroll records in shape now
October's here! Time for falling leaves to wave goodbye to summer and for you to turn your attention to pumpkins, pies, and payroll reports. Here are three tasks to complete as the fourth and final quarter of 2016 begins.
- Review worker classifications. Business relationships can change over time, and you want to be sure that workers you have been treating as independent contractors still fit that description. Reassess using the three sets of common factors: behavioral control, financial control, and your business relationship. Document your answers and your final decision. While you're completing your review, check Forms W-9, "Request for Taxpayer Identification Number and Certification." Are the forms in your files up-to-date? If not, request a Form W-9 before year-end so you can properly report the payments your business made to an independent contractor during the year. You'll use Form 1099-MISC to report those payments. Having the correct information on hand is especially important this year, because the due date to issue and file Forms 1099-MISC for 2016 is January 31, 2017, if you are reporting nonemployee compensation in box 7.
- Add up your full-time employees. If you're an "applicable large employer" under Affordable Care Act rules, you may have to report information to the IRS. You meet the definition if your business had an average of at least 50 full-time employees during the prior year. That number includes full-time equivalent employees, so be sure to count carefully. Contact us for details on making the determination.
- Clean out old files. In general, federal requirements say you'll need to keep payroll records for a minimum of four years. Four years from when? You start counting from the due date of the employee’s personal income tax return (typically April 15) for the year in which you withheld payroll taxes from the wage payment. You may need to hang on to certain types of records for a longer period, and your state may have different guidelines. Keep an inventory list of the records you dispose of, and shred documents that contain personal identifying information.
Do you have payroll questions? Give us a call. We're happy to help.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2016
October 17, 2016
Save time at year-end by getting your payroll records in shape now
October's here! Time for falling leaves to wave goodbye to summer and for you to turn your attention to pumpkins, pies, and payroll reports. Here are three tasks to complete as the fourth and final quarter of 2016 begins.
- Review worker classifications. Business relationships can change over time, and you want to be sure that workers you have been treating as independent contractors still fit that description. Reassess using the three sets of common factors: behavioral control, financial control, and your business relationship. Document your answers and your final decision. While you're completing your review, check Forms W-9, "Request for Taxpayer Identification Number and Certification." Are the forms in your files up-to-date? If not, request a Form W-9 before year-end so you can properly report the payments your business made to an independent contractor during the year. You'll use Form 1099-MISC to report those payments. Having the correct information on hand is especially important this year, because the due date to issue and file Forms 1099-MISC for 2016 is January 31, 2017, if you are reporting nonemployee compensation in box 7.
- Add up your full-time employees. If you're an "applicable large employer" under Affordable Care Act rules, you may have to report information to the IRS. You meet the definition if your business had an average of at least 50 full-time employees during the prior year. That number includes full-time equivalent employees, so be sure to count carefully. Contact us for details on making the determination.
- Clean out old files. In general, federal requirements say you'll need to keep payroll records for a minimum of four years. Four years from when? You start counting from the due date of the employee’s personal income tax return (typically April 15) for the year in which you withheld payroll taxes from the wage payment. You may need to hang on to certain types of records for a longer period, and your state may have different guidelines. Keep an inventory list of the records you dispose of, and shred documents that contain personal identifying information.
Do you have payroll questions? Give us a call. We're happy to help.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
