Which Payroll Forms Do Employers Need?

What are payroll forms?

Payroll forms are documents that a business uses to track their spending on payroll and inform the government of their payroll tax liabilities. These forms document the taxes withheld from employees’ earnings — including their wages, salaries and bonuses — to fund federal programs such as Medicare and Social Security. Employers are typically required to withhold a certain percentage of workers’ earnings to fulfill this federal requirement unless they’re working with independent contractors.

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The portion of employee earnings withheld by the employer is known as the employee contribution. But employers are also required to contribute to these federal programs, and the amount is based on employee pay that’s also accounted for on payroll tax forms. States also have payroll tax requirements for employees and employers, but they vary among jurisdictions.

Payroll forms also document federal and state unemployment taxes, contractor tax information, total contractor payments, and employee healthcare coverage.

Types of payroll forms for employers

The most important payroll forms are summarized in the table below, which is followed by an in-depth explanation of each payroll form.

Form W-4

W-4 forms are how you determine the federal income tax rate for each employee. You then withhold the corresponding percentage of the employee’s wages every time you pay them. You rarely remit this payment immediately; instead, you regularly send all payroll taxes for the quarter to the IRS in one batch. To verify your payroll calculations, keep copies of your employees’ W-4 forms on file.

Have employees file completed W-4 forms with you on or before their first day of employment. This should take no more than five minutes, as the form isn’t complicated and asks for very little information. W-4 forms are used solely with employees; contractors must complete a different form. We’ll explain that form soon, but first, brush up on the differences between employees and contractors.

Form W-2

Each employee should receive a W-2 form that summarizes how you used their W-4 to withhold their taxes over the calendar year. The form displays the employee’s annual gross wages and taxes withheld. You must send a copy to the employee and the Social Security Administration (SSA) by Jan. 31 of the following calendar year. 

You’ll need six copies of each employee’s W-2 form. These six copies are used for the following purposes:

1. For your submission to the SSA
2. For the employee’s personal records
3. For the employee to include with their federal tax return
4. For the employee to include with their state and local tax returns
5. For you to submit to your state and local tax authorities
6. For your business records

Form W-3

Your W-3 form summarizes all of your employees’ individual W-2 forms. It indicates the total wages you paid and taxes you withheld across all of your employees. This form makes it easy to double-check your numbers: When you add all employee gross wages, the sum should match the one on your W-3. You file one W-3 form with the SSA alongside all of your W-2 forms and store a copy for your records.

Form W-9

The W-9 form is the contractor’s equivalent of the W-4 form. However, because you don’t deduct taxes from contractor payments, the form doesn’t ask your contractors to indicate their withholding. All that’s needed is their basic information, their Social Security number and an indication of their business entity type if they have one. Contractors should file their W-9 form after accepting their first assignment from you. [Read related article: What Are W-9 and 1099 Tax Forms?]

Form 1099-NEC

Just as Form W-9 is the contractor equivalent of Form W-4, Form 1099-NEC is the contractor equivalent of Form W-2. Each contractor you pay at least $600 during a calendar year must receive a 1099-NEC form from you. In each 1099-NEC form, you state how much you paid the contractor. Just as with W-2 forms, your deadline to send six copies to the relevant parties is Jan. 31 of the following year.

Note that Form 1099-NEC is a relatively new form. It was introduced as a replacement for Form 1099-MISC in tax year 2020. Before 1982, it was used for a different purpose and was shelved until a few years ago.

Form 940

If your company must file and pay federal unemployment (FUTA) taxes, you must file IRS Form 940. You’ll know your company must pay FUTA taxes if you paid total gross wages of at least $1,500. You must also pay FUTA taxes if you had at least one employee during at least 20 weeks of the year. If your total FUTA taxes exceed $500, you must pay this tax in quarterly installments.

Your 940 form indicates the total FUTA taxes you paid during the tax year in question. You must file it by Jan. 31 of the following year. [Find out why your business needs unemployment insurance.]

Form 941

Form 941 is necessary for most small businesses that withhold federal income taxes and FICA taxes (Social Security and Medicare) from their employees’ paychecks. You file this form quarterly to indicate how much you withheld in payroll taxes across all your employees per quarter. Accurate calculations are key because when you file Form W-3, the IRS will cross-check its values with those on your 941 forms.

On your 941 form, you indicate each of the following values for the quarter in question:

• Total gross wages paid to all employees
• Federal income tax withholding
• FICA tax withholding
• Additional tax withholding
• Reported tips
• Several types of adjustments, if applicable

Your due date for each quarter’s Form 941 is the final day of the month after the quarter ends. For example, Q1 runs from Jan. 1 through March 31, so you have until April 30 to file your Q1 Form 941.

Form 944

Occasionally, a small business can file IRS Form 944 annually instead of quarterly. This rule applies solely to small businesses with a maximum total FICA and federal income tax liability of $1,000. In other words, it’s exceedingly rare to need Form 944 instead of Form 941.

If you are among the few businesses that can ditch 941 forms for 944 forms, the IRS will tell you so. You then file the form by Jan. 31 of the following calendar year. You include the same information as on Form 941 but in an easier, shorter format suited to your small tax liability. 

Form 1095-B

Form 1095-B tells the IRS about the self-insured health plan you provide your employees. Self-insured plans are health insurance plans your company operates rather than buying insurance from a third-party insurer. For example, many universities operate their own insurance plans for their employees and students. These plans are self-insured, but chances are that if you run a smaller business, you don’t offer this type of plan.

But if your business’s health insurance offerings are indeed self-insured, you’ll need to send each employee Form 1095-B. This form shows the months during which you covered the employee. Retain a copy for your records and send employees two copies — one each for their records and tax returns — by Jan. 31. You must also send your 1095-B form to the IRS by Feb. 28. If you e-file with the IRS instead, you have until March 31.

Form 1094-B

Just as Form W-3 summarizes your W-2 forms, Form 1094-B summarizes your 1095-B forms. It states your contact information and the total number of 1095-B forms you filed. File your 1094-B form alongside your 1095-B forms.

Form 1095-C

If your company has at least 50 full-time-equivalent employees and offers them third-party health insurance rather than self-insured healthcare plans, you must file Form 1095-C. As with Form 1095-B, you generate a 1095-C form for each employee. The form indicates the months during which the employee was covered and lists the employee’s required contribution for each month. Even employees who did not receive coverage under your plan must receive this form.

Your employees must receive their 1095-C forms by Jan. 31. The IRS must receive all your forms via postal mail by Feb. 28 or electronically by March 31. 

Form 1094-C

Form 1094-C is to Form 1095-C as Form 1094-B is to Form 1095-B — it’s a summary form used to record the number of 1095-C forms you’re filing and your applicable large employer (ALE) member information. If applicable, you also list the other members in your aggregated ALE group. You must file Form 1094-C when you file your 1095-C forms.

Form I-9

Form I-9 is required to verify an employee’s identity and determine whether they are eligible to work in the U.S. This form is filled out by both employers and employees, and it should be filled out by everyone regardless of their citizenship status. 

This form should be completed by the first day an employee reports to work.

Form 8027

Form 8027 is required for food or beverage establishments, such as restaurants or bars, with more than 10 employees. The form is used to report the amount of tips paid to employees during a given time period and to calculate whether the employer owes any allocated tips to employees if the total tip amount the tipped workers received was too low. 

Form 8027 is filled out by the employer and is due March 1 if you file by paper or March 31 if you file electronically. [Check out the best payroll services for restaurants.]

Form 1096

Form 1096 is a summary of all the 1099-NEC forms you’ve filed in a tax year. Remember, a 1099-NEC states the amount you paid to a contractor in a tax year and is required only for payments that exceed $600. If you filed only one 1099-NEC form, you’re not required to fill out form 1096.

Notably, this form is also required only if you’re filing your taxes by mail, so if you’re filing electronically, you won’t have to worry about it. Like the 1099-NEC, Form 1096 is due Jan. 31 if applicable.

Importance of maintaining payroll forms

Payroll forms are federally mandated documents that all employers must maintain, so failing to file them can mean expensive fines and penalties. Even if you file the appropriate paperwork, error-filled forms can lead to additional fines. In extreme cases, they trigger costly, drawn-out tax audits. This is just one reason it’s vital to maintain accurate payroll forms.

Additionally, payroll forms help confirm that your recorded calculations are correct. For instance, if you generate a report on all of your annual employee payments and the numbers don’t match your quarterly reports, you’ll know something’s wrong. You can then find the error and rectify it before it leads to more mistakes.

If all these forms and recordkeeping sound like a lot to keep track of, don’t fret. Payroll software is an easy way to ensure that your payroll forms are in order, and we share our top picks below.

Best payroll software for managing payroll forms

All small business owners should know about the payroll forms outlined above to remain compliant when paying business taxes. However, this doesn’t mean you have to do annoying manual calculations and fill out tedious forms. Instead, you can automate all of it with payroll software, which turns your wage and tax records into payroll forms with just a few clicks. Below, we’ve listed a few of the best payroll services to help with this.

ADP

In business for more than 70 years, ADP is a trusted name in the payroll service industry. ADP’s proprietary Run payroll software is an intuitive and flexible payroll solution for small businesses. With Run, businesses can pay both employees and contractors with useful customization options such as one-time bonuses and off-cycle payroll runs. It uses spreadsheet-style tools that are easy to learn, and you can even automate the payroll process for employees who work the same hours each week.

Run also integrates with timekeeping and accounting software and uses an AI-powered error-detection feature to catch mistakes ahead of time. Just as importantly, Run calculates, deducts and files all applicable payroll taxes. Plus, ADP offers an entire suite of HR-focused solutions beyond payroll processing, so it’s capable of growing with your business. Learn more in our ADP Payroll review.

Rippling

Rippling provides a wide variety of HR tools, but its payroll solution is one of its standout services; it enables users to run payroll in as little as 90 seconds. Rippling also allows unlimited monthly payroll runs, and you can use the platform to pay workers both in the U.S. and internationally via international wire transfer. The company prides itself on accuracy and markets a 100-percent error-free guarantee.

Rippling handles all of the documentation you need to stay compliant with tax requirements, whether at home or abroad. The software flags things like violations of minimum-wage laws, and it automatically generates and distributes payroll forms to employees and contractors. With customizable data access, Rippling lets you delegate payroll runs to other team members and do off-cycle payroll runs for no extra charge. Get all the details in our review of Rippling Payroll.

OnPay

Designed for small businesses, OnPay is a straightforward solution for handling your payroll and payroll tax needs. It’s easy to run payroll from the software’s intuitive desktop interface by adding the hours each employee works, checking that the proper payroll deductions are withheld and adding any employee bonuses or commissions. The platform automatically stays up to date with state-specific taxation requirements to ensure you’re in compliance.

OnPay allows you to pay your workers via paper check, direct deposit or pay card. You can add workers to the system yourself, or employees can onboard themselves and view their pay stubs in the self-service portal. You can also set up automated email reminders so you never forget to run payroll. See the costs and more details in our OnPay review.

Square

With Square, you can easily run payroll for both employees and contractors while staying on top of payroll taxes. This easy-to-use online service and mobile app combine your payroll data with applicable tax rules to ensure you stay compliant and meet your filing deadlines. The system automatically preps and files the necessary tax forms based on the payroll data that’s already in your system.

Square integrates with highly rated time and attendance software so your payroll accurately reflects the hours employees work. Employers can run next-day payroll or automate it to run on their preferred schedule. You can pay your workers directly from your Square dashboard via check, direct deposit or Cash App.

Automate your payroll forms with payroll software

For many small business owners, keeping up to date with tax requirements can be more of an afterthought than a priority. But mistakes on your payroll forms can cost you, and filing all of the payroll forms your business is required to submit — on time and error-free — is no small task.

Luckily, payroll software lifts much of the burden off business owners by automatically filing the proper tax documents based on your payroll data. With lots of other useful features, like time tracking and accounting software integrations, payroll services also make it easy to pay your employees accurately and on time. Consider using high-quality payroll software to stay in compliance with your payroll forms while keeping your employees happy.

Erin Donaghue contributed to this article.