If your small business hired employees or independent contractors for the first time in 2014, then it’s time to familiarize yourself with your wage and payment reporting obligations to the IRS and Social Security Administration.

For seasoned employers, there are also some changes to 2015 filing requirements that you should be aware of.

Here’s what you need to know.

If you paid employees and withheld taxes in 2014, it’s time to issue W-2s

This is the time of year to report wages, tips, income tax withholdings, social security and Medicare tax withholding as well as other forms of compensation (such as the cost of healthcare benefits if you have more than 250 employees).

To do this, you’ll need to complete a W-2 form for each employee. These can be completed in paper format or prepared online for free via the Social Security Administration (SSA) website. You can also verify your employees’ names and Social Security numbers against SSA records to avoid errors (which must be re-filed using Form W-2c).

Once completed, provide your employees with the appropriate copy so that they can complete their federal and state returns. You’ll also keep a copy for your records.

Next, send Copy A of the W-2 to the Social Security Administration (at this address) or electronically. The W-2 form should be accompanied by Form W-3 (a summary of all your W-2s). Finally, keep Copy D for your records.

To reduce submission rejections, take advantage of AccuWage, a free software program from the SSA that allows you to check forms W-2 and W-2c before you send them to the SSA.

Preparing 1099 Forms for independent contractors

Many firms overlook the fact that upon hiring an independent contractor, they should ensure that contractors complete and provide them with a W-9 form (Request for Taxpayer Identification Number and Certification). The form is used to help you prepare payments to the contractor during the year. It also contains the information you’ll need to provide the contractor with a Form 1099-MISC during reporting season.

Simply put, a 1099 is used by your business to report payments made in the course of a year to a contractor (if you paid out less than $600 then you don’t need to provide 1099s). Consider it the independent contractor’s equivalent of a W-2. See below for information about the 2015 deadline for providing contractors with a copy of Form 1099-MISC.

Not getting a W-9 from a contractor can delay the issue of a 1099 form and may mean you miss the deadline, so make sure you have all W-9s on file well in advance in order to avoid penalties.

Read more about Forms and Associated Taxes for Independent Contractors from the IRS.

Filing deadlines have changed

The deadline for providing employees with W-2s is typically January 31, but because that date falls on a weekend, this year’s deadline is February 2. In addition, all forms (W-2 and W-3) must be provided to the SSA by March 2, 2015.

Businesses should also provide independent contractors with a copy of their 1099 by February 2, 2015.

Other changes in 2015 include conditions upon which the SSA will reject W-2 forms as well as other changes in line item reporting requirements. Read all about them in this article by Accounting Today.

Have questions?

Because reporting obligations change each year, it’s a good idea to get the advice of your tax preparation expert to help avoid mistakes and potential penalties. You can also contact the Social Security Administration directly via its regional employer liaison officers or Employer Reporting Service Center toll-free help line or via email.


About the Author(s)

U.S. Small Business Administration

The SBA is an independent federal agency that works to assist and protect the interests of American small businesses.

U.S. Small Business Administration