Let’s face it: the days of keeping books and records, as well as filing tax returns and other documents, on paper are long gone. The image of Dicken’s Bob Cratchit from A Christmas Carol sitting at a desk mired in his ledgers is something now relegated solely to fiction. But many small businesses have continued to file Forms W-2 (for employees) and 1099-MISC (for independent contractors) on paper.
For those who want to make the switch to electronic preparation and filing of these forms this year, the change can be painless. Here’s what you need to know.
Eliminate staff hours
If you’ve been handling your W-2 and 1099 responsibilities on paper in-house, it’s likely taken up considerable time for you and the staff handling these matters. If you use an electronic provider such as eFile4Biz, you free up that time to focus on doing your business. In a matter of minutes you create an account and begin to complete required forms online.
Eliminate paper problems
For W-2s, you must furnish employees with Copy B, C, and 2 additional copies and you must send all Copy As along with a transmittal (Form W-3), to the Social Security Administration. If you have more than just a couple of employees, likely you’ve had to purchase sets of W-2s each year. With electronic filing, you pay only for the forms you complete.
Typically the paper forms come in sets of two, so making a mistake on one form requires redoing two forms. In contrast, information inputted electronically makes corrections easy.
Also, preparing paper forms necessitates that you have all information on hand so you can fill in the lines and boxes all at once. With electronically-prepared forms, you can partially complete a return, save your work, and come back later to finish the form. For example, you start a form but find you’re missing information (e.g., an independent contractor’s tax identification number). Put in what you know, save it, and add the rest when you obtain the missing information.
Eliminate postage and mailing to recipients
You are required to furnish W-2s for 2017 compensation to employees no later than January 31, 2018. Similarly, you are required to furnish 1099s to independent contractors who earned $600 or more from you in 2017 no later than January 31, 2018. If you’ve been preparing paper forms, you’ve had to mail copies of them to recipients by this date. This entails postage costs and possibly trips to the U.S. Post Office. With e-filing, the burden of furnishing the forms can be shifted to eFile4Biz or another provider you use. Even better, employees and independent contractors can be offered the option of receiving their forms electronically. If they accept, your costs are further reduced.
Eliminate delivery concerns
Paper forms can be lost in the mail. With e-filing, you can be assured that the forms have been delivered. You’ll receive a confirmation that the Social Security Administration has received your W-2s and that the IRS has received your 1099s. Remember that W-2s for 2017 must be submitted to the Social Security Administration by January 31, 2018 (the same day they must be furnished to employees; Forms 1099-MISC showing nonemployee compensation paid to independent contractors for 2017 must be submitted to the IRS by January 31, 2018.
As an employer you are required to keep records of returns for at least four years. This includes copies of W-2s that have been returned to you as undeliverable. If you use an outside provider such as eFile4biz, your data is stored in a secured server. You can view or retrieve forms for at least four years after they’ve been filed.
Running a small business can be an exciting and challenging endeavor. But it’s wise for you to focus your efforts on running your business, dealing with customers or clients, overseeing employees, and doing strategic planning. Changing to electronic preparation and filing of W-2s and 1099s can ease your employer burdens and let you do what you do best.
This post was created in collaboration with efile4biz, a leading IRS-authorized e-file provider committed to helping employers process and file 1099s, W-2s, and ACA forms easily and conveniently. All opinions expressed in this post are my own and not those of efile4biz.