What, what, wha!? The first step to successfully filing your tax documents is understanding the terminology!
As a small business owner you’re responsible for filing your company’s taxes. Filling out the forms—or even knowing what forms to fill out can be challenging sometimes. Here is a glossary of payroll tax terms that will help you navigate the system. For a complimentary accounting and bookkeeping consultation please contact Mill Creek Accounting Services today!
Federal Unemployment Tax – also called FUTA – has a special payment arrangement. As you pay payroll you set aside the tax owed for FUTA in a liability account. If at any time during a calendar year your FUTA tax exceeds $500 you have to make a deposit. The deposit is due by the last day of the month following the end of the quarter where the liability was $500 or more. Phew!!! That seems like a mouth full! If your FUTA liability never reaches $500, then you do not have to make a deposit. You can make your payment annually.
State Income Tax Withholding – Generally this payment follows the same payment cycle as the 941 deposit. So you have to deposit the liability by the 15th of the month for the prior month’s activity.
State Unemployment Tax – Payment is due quarterly – make payments to Unemployment Insurance Division. For example, at the end of the first Quarter, March 31, you have until approximately April 30th to make your payment.
Federal Unemployment Tax – also called FUTA – has a special payment arrangement. As you pay payroll you set aside the tax owed for FUTA in a liability account. If at any time during a calendar year your FUTA tax exceeds $500 you have to make a deposit. The deposit is due by the last day of the month following the end of the quarter where the liability was $500 or more. Phew!!! That seems like a mouth full! If your FUTA liability never reaches $500, then you do not have to make a deposit. You can make your payment annually.
State Income Tax Withholding – Generally this payment follows the same payment cycle as the 941 deposit. So you have to deposit the liability by the 15th of the month for the prior month’s activity.
State Unemployment Tax – Payment is due quarterly – make payments to Unemployment Insurance Division. For example, at the end of the first Quarter, March 31, you have until approximately April 30th to make your payment.
So know we know the various taxes and when they are due, now how do you actually pay them? Take a look at the list below:
So we now know what taxes need to be paid, when they are due, and where to pay them. Now how do the various agencies know you have paid the correct amounts?
Each year every company that has payroll is required to file Quarterly payroll reports and Annual payroll reports. The various agencies use these reports to verify if your payments are correct or not. The following list explains the reports due:
Form 941 – Due Quarterly by the last day of the month following the end of a quarter. This report verifies that your 941 deposits for the quarter are correct. There should be no money owed with this report, as you have already made your deposits.
Form 940 – Due Annually – Form 940 is used to determine the total tax due for your Federal Unemployment tax. This report should be filed by February 1st for the prior year’s payroll activity. Generally, you will need to send the report with a payment, if you did not have to make a 940 deposit during the prior year.
MW-3 Reconciliation – Due Annually, this report reconciles your wages for state withholding purposes. Unlike the feds that require a quarterly reconciliation on form 941, the state of MT reconciles wages annually. This report also requires copies of W-2 and 1099s (discussed in another blog) to be submitted.
Form UI-5 – Montana Employer’s Unemployment Insurance Quarterly Wage Report – This report is a quarterly report used to report wages and calculate your MT Unemployment tax. You will submit payment with this form after each quarter ends.
Form W-2 – Due annually – This form is filled out for the following:
Form W-3 – To be filed with Copy A of form W-2 for all of your employees. This report goes to the Social Security Administration as verification that all social security deposits have been properly made.
Contact Robert at: [email protected] Phone: 406-926-1057
Mill Creek Accounting Services, LLC was founded with the mission to provide a resource for accounting services to Missoula and its surrounding area organizations. Mill Creek Accounting Services have seen it over and over again, when institutions focus purely on their production and service needs, while they neglected their accounting systems. The results spoke for themselves: unreliable financial information, slow invoicing and payment collections, strained relationships, and crushing stress on owners and staff. There is a better way to do business!
Click here to learn more: www.millcreekaccounting.com. You can schedule a complimentary consultation for your small business in Missoula, MT.
- 941 Deposit – The IRS uses an online system called EFTPS, which allows you to log in and pay the 941 deposit whenever you need to
- FUTA Payment – Can be paid on EFTPS or as a check payment annually
- State Income Tax – For Montana, business can apply for an online account called TAP, Taxpayer Access Point. A check can be sent, make sure to send the payment with Form MW-1, which is a Montana Withholding Tax Payment Voucher.
- State Unemployment Tax – For Montana, payment can be made by check payable to Unemployment Insurance Division. Department of Labor and Industry also has an online system called UI eServices for Employers. Register for this online system and you can make payments online.
So we now know what taxes need to be paid, when they are due, and where to pay them. Now how do the various agencies know you have paid the correct amounts?
Each year every company that has payroll is required to file Quarterly payroll reports and Annual payroll reports. The various agencies use these reports to verify if your payments are correct or not. The following list explains the reports due:
Form 941 – Due Quarterly by the last day of the month following the end of a quarter. This report verifies that your 941 deposits for the quarter are correct. There should be no money owed with this report, as you have already made your deposits.
Form 940 – Due Annually – Form 940 is used to determine the total tax due for your Federal Unemployment tax. This report should be filed by February 1st for the prior year’s payroll activity. Generally, you will need to send the report with a payment, if you did not have to make a 940 deposit during the prior year.
MW-3 Reconciliation – Due Annually, this report reconciles your wages for state withholding purposes. Unlike the feds that require a quarterly reconciliation on form 941, the state of MT reconciles wages annually. This report also requires copies of W-2 and 1099s (discussed in another blog) to be submitted.
Form UI-5 – Montana Employer’s Unemployment Insurance Quarterly Wage Report – This report is a quarterly report used to report wages and calculate your MT Unemployment tax. You will submit payment with this form after each quarter ends.
Form W-2 – Due annually – This form is filled out for the following:
- W-2 Copy A – For Social Security Administration
- Copy 1 – For State, City, or Local Tax Department (MW-3 Reconciliation)
- Copy B – To be filed with employee’s federal tax return
- Copy C – For Employee’s Records
- Copy 2 – To Be Filed with Employee’s State, City, or Local Income tax return
- Copy D – For employer
Form W-3 – To be filed with Copy A of form W-2 for all of your employees. This report goes to the Social Security Administration as verification that all social security deposits have been properly made.
Contact Robert at: [email protected] Phone: 406-926-1057
Mill Creek Accounting Services, LLC was founded with the mission to provide a resource for accounting services to Missoula and its surrounding area organizations. Mill Creek Accounting Services have seen it over and over again, when institutions focus purely on their production and service needs, while they neglected their accounting systems. The results spoke for themselves: unreliable financial information, slow invoicing and payment collections, strained relationships, and crushing stress on owners and staff. There is a better way to do business!
Click here to learn more: www.millcreekaccounting.com. You can schedule a complimentary consultation for your small business in Missoula, MT.