For us accountants January brings the greatest payroll function of the year; printing the year end payroll reports. These include the W-2’s, W-3 and Form 940. They all must tie to the combined total of the quarterly 941 reports and the deposits made to the Internal Revenue Service.
Time to Prepare for Year-End Payroll Reports
I dread January of every year. I have to spend so much time preparing the year end payroll reports prior to the January 31 deadline. Not only must your quarterly’s and monthly’s tie together, but it has to match the general ledger at year end. So if you do these steps now in early December, then you only have to tie December’s payroll information to the final quarter and then to the year-end information in January. It will save you a lot of time in January.
Federal Unemployment Tax Act or FUTA for short is a part of the Internal Revenue Code and is an employer tax on wages paid to employees. It is used to fund unemployment benefits. The tax is paid on the first $7,000 of wages paid to every employee. It is reported via Form 940 https://businessecon.org/resources/. The Form must be filed and all taxes paid by January 31, 2021.