The New Year is an exciting time with new possibilities and a fresh start! But there are still a few very important things to do for tax time purposes in January to close out the previous year.
There are different requirements whether your construction company has hired employees or if you use subcontractors to get the work done. Taxes are confusing, and knowing which forms are needed and what to file when, adds another level of confusion. Let’s try to clear some of it up.
For Your Employees
If you have employees, here is what you need to do to be compliant for payroll tax requirements and a few tips to get you started on the right foot this year.
January Checklist for Previous Year’s Tax Filing
- Review employee information for current and inactive employees paid in previous year
- Legal name
- Address
- Send out to employees W-2 forms by January 31st
- File employee W-2 forms with the Social Security Administration by February 1
- File Federal Unemployment Tax Act (FUTA): Form 940 by February 1
- File and pay State Unemployment Tax Act (SUTA) by January 31
- File previous year quarterly federal income tax and Federal Insurance Contributions Act (FICA) tax returns: Form 941 or 944 by January 31
Note: If you are using Payroll software, you should be able to file your documents electronically through your software.
Best Practices for the New Year
- Update payroll wage rates, withholdings and deductions as necessary
- Review and plan for upcoming anniversary dates, pay increases and vacation accrual changes
- Review and plan for any benefit changes
For Your Contractors
When you work with contractors, different forms are required for tax filings. Here is your list and tips to make the process go smoothly.
January Checklist for Previous Year’s Tax Filing
- Identify list of who owe 1099 forms to
- Anyone you paid over $600 for services performed by someone who is not your employee (including parts and materials) (box 1)
- Be sure to review and stay updated on the IRS instructions for who requires a 1099 form.
- Gather all your W-9 forms you have on file and request any W-9 forms from those you do not have
- Enter the W-9 form information into QuickBooks by going to the Vendor Menu and be sure to checkmark the box Track Payments for 1099
- Send out your forms to contractors by January 31st
- File your 1099-NEC or 1099-MISC by:
- 1099-NEC due by February 1st for both paper and electronic filings
- 1099-MISC by March 1st by for paper filings; or March 31st for electronic filings
Best Practices for the New Year
- Request W-9 form prior to paying your subcontractor during the project
- Send out 1099’s earlier in January to give your subcontractors time to review and also give yourself time to make any changes before you file
Stay Organized
We hope this list is helpful. Although payroll taxes can be rather confusing, it is extremely important to get the right forms, to the right people… and on-time. For more specific information on tax requirements, consult with your CPA.
As you can see, it can be very beneficial to have your employee payroll information organized and maintained throughout the year so you are not scrambling at the last minute to get everything completed, sent to the right people and filed on time. 24hr Bookkeeper provides outsourced bookkeeping, payroll management and can help with setup and maintenance so you have the information you need when it’s time to do taxes.
Mark the dates on your calendar but get working on these items now (if you aren’t already)!
Schedule a time with us to see how we can help with set up and maintenance of your financials!
