Reporting & Recordkeeping (6)

The Form W2 is the summation of all of an employees payroll data for the year.  It is sent with all other W2s and a summary form called a W3 to the Social Security Administration by January 31st of the following year.  It must also be supplied to the employee by the same date.

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If you discover an error on a W-2 after the employee has filed their own Form 1040 they may be required to file an amended Federal Tax return and possibly an amended State Tax Return as well. Errors have to be corrected.

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Provide a copy from your files. It can be a different copy than the Copy B he normally gets for filing with their 1040. They all have the same information.

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If you make an error on a W-2 you must file and give to the employee a W-2C.  That is a correcting form.

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The Schedule C is used for the typical single owner business (sole proprietorship). If you have an LLC set up in your state, your filing status may be determined by state laws. For instance, in CA, single-member LLC’s can’t use Schedule C for sole proprietorship. They must file as a C or S corporation.

If your state doesn’t dictate how you can file, LLC’s can choose their tax status. For single owners, you can choose a Schedule C sole proprietorship on your personal return, or you can be taxed as a C or S corporation. If there are 2 or more owners, you can choose between a Partnership or a C or S corporation.

Partnerships file on a form 1065. C corporations file on a form 1120. S corporations file on a form 1120S. Business returns are generally due by March 15th each year, unless you have a fiscal year end other than the calendar year. K-1’s are required to be issued to the owners from the business in a partnership or S corporation to report the income earned from the business. The K-1 is then reported on the owner’s personal return to pay taxes on the business income. C Corporations pay taxes directly on their returns, so no K-1 is necessary.

If you’re unsure about what to file, or what will be best for you and your business to choose as a business and tax entity, you should consult with a tax professional. I often help small businesses figure out their best route and then I assist them with their accounting and taxes to keep them compliant.

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A good software program that is automatically updated by the vendor is the easiest way to keep track of all the deadlines and dates.  As a service bureau, our software covers all states and localities as well as Federal dates and deadlines.

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