As a small business owner who has even one employee, it is important to make sure you file the right forms. Federal Employment Tax, forms 940 and 941, are often missed and they are the reason that many small business owners get in trouble. Many businesses are fined and there are times when the owners are jailed because they forgot these forms.

So, what are they?

Form 941 is called the employer’s quarterly federal tax return. It is used to report what federal income taxes, social security taxes, and Medicare taxes that are withheld. It also reports how much money the business owner pays towards social security and Medicare, as well as any employment tax deposits made during the quarter.

This form needs to be sent in quarterly and is due by the end of the next month after the quarter is finished. It can be mailed in or filed electronically.

Form 940 is a little different. It is the employer’s annual federal unemployment tax (otherwise known as FUTA). This is filed annually by small business owners to show the government how much they pay toward unemployment.

These forms are important to ensure that, as a business, you are operating and paying the right taxes to have employees. The government also needs to make sure that your employees are getting taxed the right amount. This information is important at tax time to ensure that you and your employees get the amount of money back that you deserve!

Contact us for all of your bookkeeping and accounting needs.