Having solid, up to-date financials and accurate year-end reports will be critical for business growth and success as you kick off 2021. This includes how your business has done in the past, what taxes were withheld and how you paid your vendors and contractors.
Independent Contractor or Employee?
Knowing the details of the employer—employee relationship is the first step to a deeper understanding of your reporting duties as a business owner. Dig deeper to find out whether your employees are 1099 contractors or W2 employees.
Figuring out the type of employee you have is only the beginning of the year-end planning process. From there, it all comes down to the information return. If an individual is considered an employee, your organization is required to withhold payroll tax. These individuals then receive the Form W2. For independent contractors, you’ll need to review and familiarize yourself with the 1099 series.
The W-2 E-book
Every employer engaged in a trade or business that pays for services performed by an employee must furnish a Form W-2 to each employee, even if the employee is related to the employer. Key factors that require the filing of a Form W-2 include withholding of income, Social Security or Medicare taxes or if you paid $600 or more in wages, even without withholding taxes.
There are so many intricacies when it comes to Form W-2.
The 1099 E-book
Organizations that make certain payments to nonemployees during a calendar year must distribute annual information returns both to the IRS and to the recipient of the payment. In order to facilitate payment to independent contractors and vendors, the IRS created the Form 1099 Series.
Each Form 1099 has its own specific reporting requirements. Learn what you need to know to make sure you’re in compliance.
Personal Use of a Company Vehicle
Does your organization provide vehicles to its employees? If so, you need to pay attention to how this may affect your employee’s taxable income. When your employee uses a company vehicle for personal use, it becomes taxable and must be reported on their W-2.
By catching this early and preparing for it throughout the year, you’ll be ready for a simpler year-end planning process.
While 1099s and W2s are the big forms you’ll worry about for reporting, there are other considerations when it comes to year-end compliance.
Tax Planning Guide
The Pocket Tax Guide provides a quick view of tax updates, current rates and new tax law summaries for business, estate, general and individuals. It has been designed to be compact and folded into a pocket-sized pamphlet.
Before you can report, you need to have proper financials in place. This begins with preparing your organization for the year-end planning process. Ideally, we believe this should happen all year long. By keeping your books year-end ready, you can make strong, strategic business decisions throughout the year and not be caught off guard when it’s time to report.
Year-end planning isn’t just a look into the past. It’s also about setting yourself up for future success and growth.
Year-end is also a chance to take a holistic look at your organization, its processes, systems and goals. In our experience, the strongest companies make year-end about more than just compliance. It’s about charting a course for the year ahead.
The Top Ten Considerations for Successful Year-End Planning
In a year where nothing has been simple, knowing where to focus your attention is paramount. We’ve compiled key target areas for you to focus on to simplify your year-end planning process.
Organizations who are proactive and strategic in their year-end planning are better set up to start the new year strong. But with so many items to consider, where do you start?