Required Year-End Reports for Businesses

 

At the end of each year, businesses like yours must prepare a few important reports to comply with legal and financial requirements.

Here’s a brief guide to the most common end-of-year reports companies should prepare:

1. Employee Tax Forms. These forms are important to maintain tax compliance and to report employee earned income.

• W-2 Forms: These forms report earned wages, tips, and other compensation paid to employees, along with taxes withheld.
  • Due Dates:
    • To Employees: By January 31, 2025.
    • To IRS and Social Security Administration (SSA): Must be submitted via paper form or electronically by January 31, 2025.
  • 1099 Forms: These forms are used to report payments made to non-employees who provided services greater than $600 during the year. Form 1099-NEC is used for contract labor, and Form 1099-MISC is used for various non-contractor reportable payments.
    • Due Dates:
      • To Recipients: Furnish or postmark Form 1099-NEC and Form 1099-MISC to recipients by January 31, 2025.
      • To IRS: File the Form 1099-NEC on paper or electronically by January 31, 2025. All other 1099 forms have a paper filing deadline of February 28, 2025, and electronic filing deadline of March 31, 2025.
    • Penalties: Filing the W2 and 1099 Forms late can result in penalties from $60 to $330 at least per return. Not filing intentionally would lead to a penalty of at least $660 per return.

2. Affordable Care Act (ACA) Reporting: These forms are required for employers with 50 or more full-time employees. Their purpose is to ensure employers and health insurance companies provide health coverage information to users and the IRS.

• 1095 & 1094 Forms: These forms disclose employer-provided health insurance options and coverage.
  • Due Dates:
    • To Employees: File by January 31, 2025.
    • To IRS: File via paper forms by February 28 or electronically by March 31, 2025. Please consult with your state legislature since individual states may vary.
  • Penalties: Filing these forms late may result in penalties ranging from $60 per return to $3,987,000 maximum.

3. Business Tax Documents: All businesses must prepare detailed financial reports to ensure their filed tax information is accurate.

• Corporate Tax Returns: Depending on the elected tax filing status, businesses need to prepare Schedule C, Form 1120 for corporations, or Form 1065 for partnerships.
  • Due Date: Franchise tax reports are due March 15, 2025, while Corporate Tax returns are due by April 15, 2025, with extensions available.
  • Penalties: The IRS calculates this based on how late the tax return is filed and the amount of unpaid tax as of the original payment due date. The “Failure to File” penalty is 5% of the unpaid taxes for each month that a tax return is late without exceeding 25% of unpaid taxes. Please keep in mind that the IRS also charges interest on penalties until the balance is paid in full.
• Estimated Tax Payments Summary: These should be the cumulative quarterly tax payments made throughout the year.

4. Payroll Reconciliations and Filings: Employers need to summarize and report payroll taxes.

• Form 941: This form states the employer’s quarterly federal tax return, as well as Social Security, and Medicare taxes withheld.
• Form 940: This form reports the employer’s Annual Federal Unemployment Tax (FUTA) contributions.
  • Due Date: File both forms quarterly with the year-end form required by January 31, 2025.
  • Penalties: The business will incur a penalty of 5% to 25% of the tax amount due. If the payment isn’t made after 5 months, the penalty will be 25% and the late payment penalty will continue accruing until the tax is paid.

5. Year-End Benefits Reporting

• 401(k) or Retirement Plan Summaries (RPS): Employers must prepare annual summaries for employees to ensure companies comply with reporting contributions made during the year. If required, a Form 5500 must also be filed by July 31, 2025.
  • Due Date: File the 401(k) or RPS by December 31, 2024.
  • Penalties: The IRS penalty for late filing a Form 5500 is $250 per day, up to $150,000. The Department of Labor (DOL) penalty for late filing can run up to $2,529 per day, with no maximum.
• Health Savings Account (HSA) Contributions (Form 8889): This form reports HSA contributions.
  • Report employer and employee contributions when filing your corporate tax returns. Please keep in mind that if your contributions exceed annual limits, they must be removed from the account before April 15, 2025 to avoid a 6% penalty on excess contributions.

Tips for a Smooth Year-End Reporting Season

1. Start Early: Gather your information proactively throughout the year to avoid last-minute rushes and mistakes.
2. Work with Professionals: Consult accountants, HR specialists, or legal advisors to ensure compliance. UniqueHR helps clients stay in compliance with the ever-changing legal and regulatory landscape so you can focus on growing your business.
3. Always Double-Check Deadlines: Always confirm due dates for federal, state, and local filings since they can vary between states and local legislatures.

By staying organized and proactive, companies can meet their year-end reporting requirements efficiently and avoid penalties or delays.