Managing your accounts receivable is very important because the timing of receivables plays a major role in your company’s cash flow. In addition, you want to ensure your customer balances are accurate, and your receivables current, based on the terms of service you offered your customers. Reconciling the individual customer account balances with the general ledger balance establishes the accuracy of the balance sheet asset. Reconciliation of
W2 forms are used to report income for your employees including Social Security and Medicare. A W2 form shows total income as well as how much has been withheld from an employee’s pay for federal, state, and local taxes. At the end of each tax year W2’s must be created for all employees for that tax year and mailed along with a W3 form to the Social Security Administration by January 31st of the following year. Copies must also be given to each employee by January 31, of the following year, and a copy kept on file.
1099-MISC forms, on the other hand, are used to report income for individuals who do work for your company but are not employees – independent contractors. Taxes are not to be withheld from independent contractors as they are responsible for their own taxes. At the end of the tax year form 1099-MISC must be mailed along with a 1096 form to the Internal Revenue Service (IRS) by January 31st of the following year. A copy must also be given to the independent contractors by January 31st of the following year, and a copy kept on file.
Business owners save more with an independent contractor than with an employee, as they will not be liable for matching the Social Security and Medicare as they are required to do with an employee; however, there is a clear definition of who should be classified as employee vs independent contractor and steep penalties are in place if employees are treated as independent contractors by your organization.
We are W2’s and 1099’s specialists! Call us at 718-809-0367 to set up an appointment so we can get started on your W2’s and 1099’s. If you need catching up with accounts backlog, we will do that as well.
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