How to Prepare W-2 Forms
The Internal Revenue Service mandates every business owner to create a W-2 form for their staff members.When creating this report, the employer must show the salaries and tax deductions received by each worker.
Consequently, before you generate a W-2 form, it is of paramount importance to determine whether your employee is a freelancer or a permanent worker in your enterprise so that you can protect your organization. Nonetheless, if you are unsure whether your worker is an employee or a freelancer, you do not have to worry as the IRS site will guide you in determining the worker’s status once you fill an IRS form.
As soon as you identify which category your worker belongs to, the other thing you ought to do is to visit the IRS website so that you can request for the W-2 form.Make sure you have the employee’s payroll information. Some of the payslip details comprise the name of the worker, his or her ID number, location and the social security number. More so, ensure you obtain the employee’s total income wages, Social Security wages, Medicare wages and any other tax deducted from the employee.
Besides you need to include all the information about your business. This includes your business name and address as well as your business ID number which is assigned by the IRS that is used to identify your business for taxation purposes.
With that in mind, the W-2 form is filled in six copies which you are supposed to give different people. The individuals who receive these forms include the SSA, State tax office, your worker and the organization itself.You should provide Copy A to the SSA, Copy 1 to the State tax branch, Copies B, C and 2 to the worker and keep Copy D for the business.
But before you fill these forms, make sure you generate a control number for your employee. This unique control number allows you to fill the W-2 forms in six parts easily as different employees have different control numbers.You can assign a control number to each employee by yourself or your payslip preparation software can create this number electronically. Whichever way you choose, make sure the control number has both letters and numbers. For instance, you can decide to use A1B2 for employee number 1.
Do not forget to counter check where to fill the needed information on the W-2 forms.So, ensure that you follow the instructions given. Moreover, make sure you use a legible black font when filling these forms.
As soon as you are done with W-2, it is vital to fill another form known as W-3 which backs up the W-2 form.The W-3 is prepared and proffered to the SSA accompanied by the W-2.Form W-3 contains the same information as W-2, so it is not difficult to complete. Lastly, from the IRS website, make sure you print out the W-2 and W-3 Forms.