Business Tax
Below is a reminder of some important things that need to be done as part of your year-end accounting. There are three sections below, some or all of which may or may not apply to your particular situation.
2021 Form 1099's
If applicable, your business needs to send Form 1099’s to required recipients on or before January 31, 2022. The IRS website gives more details, but in general nonemployee compensation needs to be reported to any individual, unincorporated business (including LLC’s unless taxed as a corporation), or attorney or law firm (even if incorporated) that you paid $600 or more to for services (not goods) or rents, or $10 or more in interest an during the calendar year in total whether by check, cash, etc. (do NOT include amounts paid by credit or debit card).
The red copy of the Form 1096 and the red copies of the Form 1099’s need to be sent to the IRS on or before January 31, 2022 as per the instructions or penalties could be assessed.
For those of our clients who use QuickBooks or Sage Peachtree or similar software, these programs can produce the 1099’s if the payees/vendors who need to be issued a 1099 are marked as such in the vendor set-up and their expense category is marked as a 1099 type expense.
We can help you prepare these forms and help calculate totals paid to each vendor, but ultimately you are responsible for providing us with the correct vendor information and amount paid.
The penalties for failure to comply with the 1099 filing requirements have greatly increased (click here for more details) ) and so have IRS enforcement efforts in the area. Please note that intentional disregard to file these forms could result in a $550 per form penalty with no limitation on the maximum amount of a penalty.
The red copy of the Form 1096 and the red copies of the Form 1099’s need to be sent to the IRS on or before January 31, 2022 as per the instructions or penalties could be assessed.
For those of our clients who use QuickBooks or Sage Peachtree or similar software, these programs can produce the 1099’s if the payees/vendors who need to be issued a 1099 are marked as such in the vendor set-up and their expense category is marked as a 1099 type expense.
We can help you prepare these forms and help calculate totals paid to each vendor, but ultimately you are responsible for providing us with the correct vendor information and amount paid.
The penalties for failure to comply with the 1099 filing requirements have greatly increased (click here for more details) ) and so have IRS enforcement efforts in the area. Please note that intentional disregard to file these forms could result in a $550 per form penalty with no limitation on the maximum amount of a penalty.
S-Corp >2% Shareholder Health Insurance Premiums
The IRS requires that company paid health insurance premiums for S-corporation owners who own 2% or more of the stock in the corporation as well as owners of LLC’s taxed as S-corporations be reported on the W-2 and Form 941. You should report this to your payroll service provider ASAP. This amount goes in box 1 wages, but is not subject to social security or Medicare taxes (FICA) or unemployment taxes. There should be no federal or state withholding. This is simply a reporting requirement and the amount of the premiums included on the W-2 is deductible from income on the owner’s personal income tax return. Remember, this amount is also reflected on your 4th quarter payroll tax returns. The total health insurance premiums paid in 2021 for more than 2% S-corporation owner(s) must be included on line 1 of the Form 941 return. The premiums are not included on line 5a or 5c however. On the more than 2% shareholder’s 2021 W-2, the total health insurance premiums paid in 2021 for each more than 2% S-corporation owner must be included on their respective W-2’s in boxes 1 and 16 (and box 18 if applicable). In addition, the premium amount should be listed in box 14. If you use a payroll service, your payroll provider will know what to do, but if you have any questions or need any help please feel free to contact us.
Personal Use of Company Car
If you or any of your employees have a company owned vehicle that is used personally as well, the IRS requires written records be maintained by employers to document the business and personal use of employer provided vehicles. This worksheet will provide you or us with the information needed to calculate the value of the personal use portion of the company automobile that needs to be added to the final paycheck of the year. The personal use value should be added to your or the employee’s final 2021 paycheck as gross wages, subject to all taxes (federal, social security, Medicare, state, local and unemployment) just like any other wage, and then the same personal use value amount should be deducted from the net paycheck.
Either you can complete the worksheet or you can fill out the top portion and send it back and we will calculate the personal use portion. This should be done ASAP to ensure the amount is reported on your payroll prior to yearend.
Either you can complete the worksheet or you can fill out the top portion and send it back and we will calculate the personal use portion. This should be done ASAP to ensure the amount is reported on your payroll prior to yearend.