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Small Business W-2 Forms: 5 Legal Reminders

By Daniel Taylor, Esq. on January 12, 2015 | Last updated on March 21, 2019

It's January, which for small business owners means it's W-2 time.

This year, W-2 forms are due in by March 2 for those small businesses filing by mail, or March 31 for those who choose to e-file; of course, employees must be provided copies of their W-2 forms by January 31. But what else do small business owners need to know about W-2 forms?

Here are five legal reminders:

  1. Who has to file W-2s? According to IRS rules, any employer engaged in a trade or business who compensates an employee more than $600 during a year (or any amount if taxes were withheld) must file a Form W-2 if income, medicare, or Social Security tax was or would have been withheld if not for a withholding allowance or exemption.
  2. What is included on a Form W-2? A W-2 shows an employee's total wages, tips, and other compensation from an employer, along with the type and amount of any withholding.
  3. Where do W-2s need to be filed? Employers must file W-2s with the Social Security Administration. The forms can be mailed, or filed electronically through the SSA's Business Services Online.
  4. What happens if you're late? Failing to file W-2s on time may lead to a penalty for each late form. The penalty can be as much as $100 per form, with a maximum overall penalty of $500,000 for small businesses (defined as a business whose average annual gross receipts were $5 million or less for the three most recent tax years).
  5. How to avoid late penalties. If you are going to be late filing your W-2 forms, you can request an extension from the IRS. You can also avoid penalties by ensuring that your forms are correct and complete. Incorrect or incomplete forms may also be penalized if not corrected.

Find more tax tips for small business owners at FindLaw's Learn section on Business Taxes.

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