Why Payroll Forms Are Important
It’s a good thing that payroll forms are as simple as they are effective at helping managers keep tabs on how much they are spending to pay their staff on a regular basis.
The employer then gets a signal that if the payroll is too high or too low, there may be reasons why it is not following the original budget, or a valid deduction has been missed or a tax break has not been taken.
Thus with an adequate set of payroll forms provided by your accountant will be enough to supply these crucial figures that indicate the accuracy of your payroll.
If you are and employer, you are already aware of the importance of accurate payroll forms. What you may not be aware of are the different elements that constitute your payroll form. You may be wondering how one payroll form becomes a single piece of document, containing all your payroll information. Let’s take a look at how a payroll form is made of.
Before you prepare a payroll form, you need to know what information will be recorded within your payroll form.
Payroll Forms Explained
Payroll forms can be confusing for both the employer and the employee. They may seem simple but there is a lot you need to know about them. There are different types of payroll forms and the right one for the correct payroll purpose needs to be chosen. The following is a list of payroll forms.
Weekly Payroll Form
The purpose of the payroll form is to record the wages earned and deductions made in a safe and convenient way. The dates are required for the record keeping to be accurate.
The weekly payroll form is divided into seven columns as shown in the examples below.
Column A: lists the weekly wages earned
Column B: lists the number of hours for which the employee worked for agreed and overtime hours
Column C: lists the date of the pay period
Column D: lists daily or weekly disposable pay (to be paid by the payday)
Column E: the deduction column which lists the deduction for taxes, pension payments, insurance payments, any deductions for any type of payments and other deductions
Column F: shows the gross wages earned for the week
Column G: shows net wages earned for the week
There is another column called "total" but it contains the total number of employees and is not required. The balance or the net wages can be seen towards the end.
W-4 Form: Withholding Allowance Certificate
Employers use the W-4 form for payroll purposes. The W-4 form or withholding allowance certificate is used by an employee to provide the information necessary for their employer to determine which tax withholding method (income tax, social security tax, Medicare tax, or employee stock transfer tax) to use in preparing the employee’s tax return. Also, the employee needs to submit this form to request that their employer make payments of federal income tax, state income tax, and/or social security tax to the IRS.
3 Ways to Pay
With the W-4 form, the employee can choose to.
Have all their tax withheld, Have income tax withheld only to the extent that tax is withheld from the employee’s pay, or Do not have any tax withheld.
How to Complete the W-4 Form
The employee should not provide their personal information on the W-4 form or make any adjustments to the information on the form.
The employee should complete the form as an independent contractor, and not as an employee, so they must sign the form.
Form W-4 should be mailed or hand-delivered to the employer. If sent by mail, the form should be as follows:
W-2 Form: Wage and Tax Statement
The Wage and Tax Statement (form W-2), is the primary record that shows federal taxes withheld from employees’ paychecks. This form is due at the end of January if your payroll period ends during the previous calendar month. This form will show how much in federal income tax you earned and the tax withheld from your paycheck during the payroll period. The W-2 is an indispensable tool for keeping track of how much in tax you owe and how much has been paid to the IRS.
If your tax liability is less than the required amount, you will receive a refund check in the mail. If your liability is more than the required amount, it might be due as early as 2 weeks before the tax due date (March 15th for most individuals, October 15th for individuals enrolling in healthcare coverage through the marketplace). If it’s due after the tax due date, you must enter an extension, either electronically or on a paper form, in order to obtain the delay. You will be responsible for the interest that accrues on your tax payment if you do not pay by the due date for any reason.
W-3 Form: Transmittal of Wage & Tax Statements
Form W-3, Transmittal of Wage & Tax Statements is a form used to communicate wage and tax information. The W-3 is sent to all an employee’s employers. The W-3 Form also provides clear and precise instructions to employers pertaining to missing wage and tax information. The W-3 Form also provides direction to the IRS about the wages paid to the employee.
One of the most common reasons for sending the W-3 Form is to request a Form 1099, which is used to report how much money the employee received for his services. You are not required to send an individual a 1099 form for all wage payments made to that person. If the pay is considered a gift, then he/she will not receive a form 1099.
The employer is required to mail the employee a Form 1099 in an envelope. Along with the 1099, the employer should also send a copy of Form W-2 and the federal transmittal form (W-3). The W-3 Form is typically sent out by the end of January.
The IRS issues the W-3 form as a transmittal to the employer’s tax and wage statements. Form W-3 includes a section regarding a summary of the tax information regarding the employee. The IRS verifies the information and determines if the information provided is accurate.
The W-3 Form consists of two copies.
Form 940: Federal Unemployment Tax Reporting
Form 940, also known as the "Federal Unemployment Tax," is used to report federal unemployment tax to the Internal Revenue Service. It is a major part of the Employment Income Record (Form 1040) and the Supplemental Income Record (Form 941). This form uses the W-2 wage, 1099-MISC, 1099-INT and 1099-R income tax forms as the primary source. This is a complete list of forms included on a 940, as defined by federal and IRS guidelines.
While this form does look intimidating to complete on a first try, it is available on the IRS website and is only required to be completed once a year before the April 15th deadline. This form is almost universally accepted in the US and many other countries as well. In fact, it is listed as a part of the W-4 Statement so if you do not complete it there is an indication that it may be missing.
Form 941: Quarterly Federal Tax Return
Form 941 provides a quarterly Federal tax return for estates and trusts, which should be filed by the administrator of the estate or trust. Form 941 is due the last day of each calendar quarter. Form 941 requires that forms and schedules that relate to a filing complete the so-called ‑book‑. Note that if the filing is made to the IRS, Form 941 is the only tax form that must be filed by the administrator of the estate or trust.
The period for which the quarter is being filed is shown in the top right-hand corner of Form 941.
Generally, Form 941 is filed by the administrator or executor of the estate or trust. ‑For example, Form 941 is filed by an executor when applying the estate’s income for the tax year.” In instances where the estate is filing Schedule A, both the executor and the administrator are responsible for preparing and filing Schedule A.
Form 944: Employer’s Annual Federal Tax Return
The Form 944 is a form filed by agricultural employers that file returns under the Social Security (FICA) tax, Unemployment (FUTA), and federal income tax withholding requirements. It is used to make payments to Social Security (FICA), Medicare, and Federal Unemployment Tax (FUTA). The form is also used to claim certain federal income tax deductions.
An employer that files Form 944 must also file Form 943. If an employer does not file Form 943, the employee does not owe self-employment tax.
Form 945: Employer’s Annual Federal Tax Return for Household Employees
The form is used to report gross wages paid to household workers. Form Form 945 serves as proof of payment. Form 945 does not need to be filed with a federal income tax return.
Form W-2, Wage and Tax Statement.
Employers use Form W-2 to report wages and federal income tax withheld on Form W-2 as well as the amount of the federal income tax liability or the amount of any overpayment.
Form W-2G: Certain Gambling Winnings
Form 8027: Annual Information Return of Tip Income
Form 8027 is one of the three different forms a restaurant operator has to submit annually to the Internal Revenue Service (IRS) for reporting certain payroll information and tips.
This form is filed by a tip source that provides services to a tipped employee. The information reported on this form includes:
- The date the employee began working for the restaurant as a tipped employee;
- The date the employee stopped working for the restaurant as a tipped employee;
- The full name, address, and TIN of the employee;
- The date and amount of the first payment of wages to the employee;
- The number of full days the employee worked during the reporting period;
- The name of the employee;
- The total amount of wages paid to the employee for the reporting period;
- The amount of tips reported by the tipped employee;
- The full name, address, and TIN of the employee’s employer;
- The name and address of the establishment where the employee was employed;
- The total number of hours worked by the employee;
- The tip credit amount claimed for the reporting period;
- The amount of tips received by the employee during the reporting period;
- The total tips received by the tipped employee during the reporting period;
- The date the employee’s employment terminated;
Schedule H, provided by the US Internal Revenue Service (IRS), is a form used for workers who are under the Internal Revenue Code Section 414. Section 414 applies to compensation received by employees working for service employees (a service employee has an independent contractor as opposed to an employee status). The form can be used for hourly, salaried and especially commissioned employees.
Usually when you are being paid as an independent contractor, your paychecks will be sent to you by the company or the individual who hired you, and you will not receive it on a direct deposit basis. You might still have to file a tax return for these payments. When you are paid on a commission, it is paid as salary. It is to report earnings at least quarterly as it is included in the amount of income that you have earned. The funds are always sent on a direct deposit basis and the payer can file a tax return electronically because the money is being deposited directly into the bank account.
You can use Schedule H to provide additional information for the records of the payer, rather than providing information on your annual Form W-2 every year. It does not mean that you can cover the information you put there with your tax return since you might still have to file a tax return.
Form WH-347: Certified Payroll
Form WH-347 is a common government form used to verify that the employer has correctly paid the workers, both current and previous, in the form of wages.
Normally, a form of this nature is completed both for each quarter and yearly and submitted to the employer’s IRS payer, or to the IRS itself. The form is optional, but in order to avoid trouble, it’s recommended that you always prepare and submit these forms.
It should be noted that this is a form for only the employer since you are not allowed to submit it yourself.
If you’re a payroll professional and earn a decent amount from your services, you could even try your hand at paying tax on your own earnings.
If you’d like to know more about the form, you can read about it in the manual issued by the US government. Or you can check out the official IRS website on how to fill out this form.
Other Payroll-related Forms for Employers
The following are some other forms that employers need to or may need to make use of when it comes to payroll.
Request for Payroll Data
Requests for this form allow employers to ask an employee to provide their current address and to verify that they are still receiving pay from the employer.
This form is often used when an employer is trying to contact an employee who is out of the state or out of the country.
This form provides the employee with the deduction of withheld taxes from each paycheck. The employee receives a copy as well.
Employers who provide an exemption from taxation on a certain type or amount of income to their employees can do so through this form.
This form allows employers to track the wages paid to each employee. Employers need to make available to the employees relevant payroll tax forms to complete when the employee receives Form W-2. These forms may include Form W-2c, which is used to calculate self-employment taxes, and Forms W-2 and W-2c, which are used to report wage and tax withholdings.
Employers may use Form W-2 to send out copies of Form W-2 to employees. Employers may also use the information on Form W-2 to file their taxes every year.
Employer Contractor Forms
Although it is easy to find a payroll software or service provider, not all company owners want to use one. In fact, some companies are too small and don’t have the resources or the need to use such software. But since the need to standardize payroll forms has increased, companies without paying software are still required to submit for all federal forms, reports and filings.
While there are many forms and reports you will need to submit, paying contractors and employees on-line is a necessity. Additionally, avoiding payroll taxes and payroll processing fees should be your main goal as a business owner.
For this reason, it’s highly recommended for businesses to start with 101 Frequently Used Payroll Forms Handbook. The book has detailed instructions for filling out each payroll form and the required information needed for submitting it to the government. It has everything you need to fill and submit. The instructions are very detailed and are usually enough for anyone to be able to fill out every form correctly.
The book also has detailed payroll laws and information, which can be very helpful. If you need an example to see how to fill out and submit a form, the book has an interactive spreadsheet form for each. This way you can see an example of the form, what information is required for it, and how exactly it’s filled out.
Non-tax Payroll Forms
Each state has payroll requirements and requirements for employer related income tax filings. For many states these are the only employer needs. However, if you have employees on a non-tax basis like a sole proprietorship, LLC or a subchapter S, you still have payroll related requirements.
There are three main types of non-tax payroll items: withholding income tax, credit for FICA and FUTA, and deductions for social security and Medicare.
In addition, you will need tax forms covering state, city, and municipal taxes.
Withholding Income Tax Forms
Withholding income tax forms are used by employers to collect taxes paid to government by employees. You’ll use these tax forms to calculate appropriate amounts to withhold from employee paychecks.
State, city, and municipal tax returns.
Income tax returns are required to be completed by employers in order to report and pay all applicable taxes and government charges. All of the forms you’ll need to complete are available from your state, city or municipal government.
Forms you may need to file include:
- Taxes(tax return)
- Curtailment (wagering tax return)
- Taxes(tax return)
- Registration (tax return)
- Excise Liquor Tax Form(tax return)
- Income Tax Form (registration only)
Frequently Asked Questions (FAQs) About Payroll Forms
Payroll forms can be a royal pain and a huge headache if you don’t get them done on time and completely. It all can be greatly simplified and organized when managed well and on time.
Consider this as in <b> an overview </b> of the most common payroll forms and how to manage them.
An Overview of Payroll Forms
Both an employee and an employer must fill out some payroll forms.
Let us first look at the employee’s forms.
U S Worker’s Compensation Form (Form 1099-MISC/W-2) … This is the most commonly used form for the employee. The Internal Revenue Service (IRS) takes the form…s data to prepare their records.
W-2 is the most basic form with some basic data to get the data to the IRS from the government for the year.
The Transmittal Form (Form 1097) … The employer sends a copy of each employee’s W-2 to the employees’ home or to their mailing address. This is filled to the receiving employee’s name, telephone number, address, social security number (SSN), and the amount reported in box 1 of the W-2.
Where can I find the payroll forms I need?
What forms are needed for payroll?
Before you can start submitting your payroll information to your employer, you’ll need to come up with an overall payroll plan, which includes the following steps:
Step 1: Establish Your Payroll Calendar
The first step of creating a payroll plan is to establish your payroll calendar. The payroll calendar should contain a list of all of the dates during which payroll is due. This includes the dates you plan to pay your staff.
The payroll calendar is simply a list of dates that you’ll need to keep for your payroll system. It doesn’t have to include information such as the amount of each employee’s pay or the payroll frequency. The payroll calendar may not contain any information. For example, you may decide to use an Excel spreadsheet for your payroll calendar.
Remember, you have to include the following dates as part of your payroll calendar:
- QuickBooks Payroll
- QuickBooks Self-Employed Tax Month
- Cash Payment
- Sole Proprietor Taxes (if applicable)
Step 2: Determine Your Employee Information
Once you’ve established your payroll calendar, the next step is to collect employee information for your payroll system and any other information you might need. The following information is required to create a payroll system:
What payroll forms do employers need for new employees?
It is important for employers to note what forms and documentation are required for hiring new employees. There are several documents to protect your business. The CPA can provide a payroll account for your business with a separate bank account. This account can be used to process payroll checks and to maintain the expenses for your business.
The payroll account must be set up in the name of the business and not as personal savings or a credit. There can be different payroll documents depending on a business’ requirement.
In short, each payment period the pay is determined as follows:
- Benefits (including workers’ compensation) calculation (not provided in net pay);
- Regular deductions of current biweekly pay times the applicable deduction percentage;
- Vacation and holiday pay deduction, plus a per day/per day deduction, if applicable;
- Union dues (not provided in net pay;
Mandatory insurance deductions, if any (e.g., for state unemployment, disability, or life insurance) (not provided in net pay);
Health benefits (not provided in net pay).
Depending on your industry and pay cycle, the above pay statement may include a number of other items, either on their own or as part of another calculation, such as automatic or designated splitting of revenues/expenses (i.e. commission). For example, in some industries, various commissions are automatically paid out of gross pay and thus will appear on your check.
Also, check with your employer or payer for warnings regarding deductions/payments (e.g., quarterly tax payments).
If you’ve changed pay periods or rate of pay, be sure to check your paychecks for accuracy and report any discrepancies immediately.