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How Do You Pay Your Team? W2 or 1099?
Construction Business Owners with employers or independent contractors…
Failing to properly pay your team can lead to compliance issues and financial penalties.
As a 7 figure construction business owner, it’s important to file the correct forms.
However, it can be easy to get W2 and W9 mixed up without proper guidance.
And that’s why today I am sharing how YOU can Unlock the secrets of accurate and compliant team payroll!…
As your construction company hires employees and subcontractors… You’ll want to be sure you’re collecting the proper forms for tax time to remain compliant (stay on the good list with the IRS).
Properly paying your team means understanding the classification of the worker as either employee or independent contractor and following the regulations and laws regarding withholding, contribution, and reporting for each classification.
W2 forms and W9 forms are both used to report income and taxes related to employees, but they serve slightly different purposes.
If you have independent contractors or freelancers, you will need to have them fill out W9 forms and issue them 1099 forms to report their income at the end of the year.
A W-9 form is used for United States-based contractors but not employees. A contractor fills out a W-9 form when you hire them to record their tax information—name (or business name), address and TIN. You keep a copy for your records, so you can file a 1099 for the contractor at tax time.
If you have employees, you’ll need to issue them W2 forms and withhold taxes as required by the IRS, report and file the taxes on time.
W2 forms are used by employers to report wages paid to employees and taxes withheld from those wages to the IRS. Employers are required to provide W2 forms to their employees by January 31st of the following year and file them with the Social Security Administration by the end of February.
Employers are also required to withhold federal income tax, Social Security and Medicare taxes from employees’ wages and submit the funds to the appropriate government agencies on behalf of employees.
Additionally, it’s important to keep accurate and detailed records of all payments made to employees and independent contractors, including any bonuses, commissions, or other forms of compensation.
Overall, properly paying your team is essential for complying with regulations, promoting fair and equitable pay practices, and maintaining a motivated and engaged workforce.
It’s important to stay informed about relevant laws and regulations and to seek professional help if necessary, this way you can make sure your team is getting paid accurately and on time.
If this is an area you need some help in, it’s important to consult with a legal and accounting professional to be sure you’re following all the laws and regulations related to classifying, paying and reporting for your team.
If you need support in this area feel free to comment below with “next steps” so I can reach out to you to talk about how my team and I might be able to support you!