Hi, I’m Bette Hochberger, CPA, CGMA. Can you believe the end of the year is almost here? As an S-Corp owner, you must provide a few things to your accountant or payroll provider by the end of the year to remain in compliance. You need these items to close 2022 without any payroll compliance taxation issues.
Essential W-2-related items you need to remain in payroll compliance are:
1. If you are a 2% or more shareholder of the S-Corp and you are planning on taking your and/or your family’s health insurance plan as a deduction from the business, your payroll company will need the total amount of medical and dental, prescription, and/or vision health insurance that was and will be paid by Dec. 31st, 2022.
2. If your business offers any retirement plans for yourself or your employees, your payroll company will need the total benefits that have been or will be paid by Dec. 31st, 2022, to remain in payroll compliance.
3. If you pay employees wages, you are responsible for withholding federal income tax and Social Security and Medicare taxes from their paychecks. You are required to file the IRS Form 941 each quarter to report the aggregate amount that it withholds.
4. Having employees may also require you to file an annual Federal Unemployment Tax Return each year on Form 940. For example, if you pay wages of $1,500 or more in any calendar quarter or have at least one employee working at least part of a day in 20 or more separate weeks, you typically need to file Form 940.
Make sure to keep in mind that there are penalties for filing late. When S corporations fail to file Form 1120S by the due date or the extended due date, the IRS will impose a minimum fine of $210. This penalty is enacted for each month or part of the month the return is late multiplied by the number of shareholders for 2022. If corporations file Form 941 after the deadline and it has an unpaid tax balance, a 5% penalty may be added to the balance for each month or partial month the tax is late, which can go up to a maximum of 25%.
If you have all these items ready to go, contact your accountant or payroll provider as soon as possible, and then you are all set with no payroll compliance taxation issues!
Thank you for sticking around. I hope you learned something new. We will see you next time!
