How many small businesses are there?
There are 30.7 million, in the United States alone!
Healthcare, social assistance, construction, and food services, are a few of the most prominent small business sectors. However, every year, new companies rise, ready to prove their worth in the business world.
If you’re a small business owner, and you want to be successful, you have to learn how to master your taxes. To help you out, we’ve created a short tax advice guide. In this article, we’ll review some of the most common mistakes employers make on W-2 forms, and what to do about it.
Read on to learn how to fill out a W-2, the right way.
Handwritten W2 Forms
For starters, we suggest you create w2 using an online platform, such as a paystub generator. Why? It’s unacceptable for employers to submit handwritten W-2 forms to employees or the SSA. Instead, all W-2 forms must be printed.
Common Formatting Errors
When you’re using a paystub generator, pay close attention to the way your W-2 format’s laid out. For instance, you should use decimal and cents when you’re entering dollar amounts on the form. Your dollar amount entries should resemble this: 0000.00, without any dollar signs.
Next, only use black, since other colors aren’t dark enough for the scanners to pickup. You’ll also want to pay attention to the font size. The font should be large enough to easily read, while still staying within the box boundaries.
Missing Personal Information
Our next piece of tax advice has to do with both missing and incorrect information. As an employer, you’re legally required to correct any errors that are present in the employee’s name or Social Security number. If you have an employee whose name changed because of a divorce or marriage, they’ll need to fill out a brand new W-4 before you can proceed.
Wrong Withholding Information
Next, let’s talk about federal income and medicare tax withholdings. You shouldn’t be making any adjustments to the amount of tax being withheld unless it’s to correct an obvious error.
For instance, if you notice the amounts on Form 941 differ from the amount withheld, you can correct this error. However, you can’t change the withholding amounts to help an employee correct under or over withholding.
Excess Contributions
Last but not least, be careful when it comes to handling excess contributions. If you have an employee whose pretax contribution exceeds the FSA contribution limit, you’ll need to refund the excess amount, along with the amount recorded as taxable wages.
Follow Our Tax Advice
Now you know some of the best tax advice, so you can file with confidence! From noticing small errors, to double-checking contributions, there’s a lot you can do to make the filing process easier. Since handwritten W-2’s are unacceptable, go ahead and find a paystub generator.
Once you find a paystub generator you can trust, double-check the formatting features. Remember, you should always use decimals when writing out amounts of money. However, you don’t need to include a dollar sign.
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