Greatland Prepares Employers for Year-end Reporting; Issues Warning About Misclassifying Workers
GRAND RAPIDS, Mich., Dec. 17, 2014 /PRNewswire/ -- If you're paying taxes, it means you're making money but that's little consolation when trying to navigate recent tax changes and avoiding misreporting that can hurt your small or mid-sized business. Now is the time to start thinking about recent tax changes and how they affect you, especially if you run a small or mid-size business (SMB). Even for those who live and breathe the business, keeping monotonous tax details straight is a tough and trying task, taking the focus off of daily necessities.
To help guide businesses through this maze of forms and rules, Greatland Corporation, a company that provides W-2 and 1099 tax forms and e-filing services to small businesses, is helping answer one of the most basic, but also most critical, questions during this time of year; "Who needs a 1099 or W-2?"
In short, 1099s and W-2s are two different tax forms used for two types of workers. Independent contractors receive 1099 forms and traditional employees will receive a W-2 every year. It can often be difficult to classify workers, and costly if you make a mistake.
If an employer misclassifies an employee as an independent contractor and has no reasonable basis for doing so, the employer is liable for unpaid employment taxes for that worker. Many view inappropriate worker status determinations as a tax loophole and even more misclassifications are due to a misunderstanding of the requirements causing the IRS to heavily monitor businesses. Estimates are that 30 percent of businesses misclassify workers, so if you're an employer, be careful.
A W-2 is the form employers will use to report yearly wage and withholding information. An employer needs to provide this form to employees no later than February 2, 2015. Employees will receive up to four copies of this form to report federal, state and local income and maintain a copy for their own records.
For better clarity, a 1099-MISC is the form individuals use to report miscellaneous income, such as income earned as a contract or freelance worker, as well as fees, royalties, commissions and rental income. If you are an employer/SMB that uses contractors or freelance workers whom you paid at least $600 during the year, you must provide them with a 1099-MISC form to report this income.
You can find a full list of year-end reporting forms and instructions on the IRS's website or at Greatland's website.
By definition, an employee is anyone who performs services for an employer and the employer can control what will be done and how it will be done. This is true even when an employer gives an employee freedom of action.
An individual is considered an independent contractor if the payer has the right to control or direct only the result of the work and not how it will be done. An employer generally does not withhold federal income tax or Social Security/Medicare taxes for independent contractors.
"Businesses aren't always aware of what they need to do during tax season, but it's becoming more and more important that they know their responsibilities to avoid penalties," says Janice Krueger, a spokesperson for Greatland. "The IRS has increased its penalties on W-2 and 1099 reporting over the last few years and many states have also taken the initiative to combat employee misclassification. States such as New York, Massachusetts, Michigan, New Jersey, and Iowa have created inter-agency task forces to research the problem and coordinate and strengthen enforcement."
About Greatland
Greatland (www.greatland.com) is the W-2 and 1099 specialist, focused on providing guidance, products, and solutions for small to mid-size businesses and accountants. Through Greatland's subsidiaries – Greatland, Nelco, and Broker Forms – the company offers an extensive array of specialized products for businesses: W-2 forms, 1099 forms, W-2 and 1099 software, online filing, business checks, presentation materials, income tax preparation supplies, and mortgage forms. Greatland also offers Yearli, a comprehensive W-2 and 1099 reporting software and online filing platform. Greatland is an employee-owned company with locations in Grand Rapids, Mich. and Green Bay, Wis. Greatland has an extensive W-2 & 1099 fact center located on its website with answers to many of the top filing questions. Follow us on Facebook or Twitter: @GreatlandCorp
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/greatland-prepares-employers-for-year-end-reporting-issues-warning-about-misclassifying-workers-300011156.html
SOURCE Greatland
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