What if you have employees?
If you have employees, you will need to pay employment taxes. Employment taxes include withholding federal and state taxes on your employees’ wages; unemployment insurance; and Social Security and Medicare payments.
How do I report and pay the taxes withheld from my employees' pay?
For New York State you will need to file an NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, and an NYS-1, Return of Tax Withheld. Guidance for the amounts to report on these returns can be found on the Tax Department website (search withholding).
You will need to file federal returns as well. The IRS website has a page devoted to Employment taxes. See www.IRS.gov (search Employment Taxes).
What records should I keep regarding my employees?
You must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Records should include:
- employer identification number,
- amounts and dates of all wage, annuity, and pension payments,
- amounts of tips reported by employees,
- the fair market value of in-kind wages paid,
- names, addresses, Social Security numbers, occupations of employees and recipients,
- employee copies of Forms W-2 and W-2c returned as undeliverable; and
- dates of employment for each employee
Records should also include:
- periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments paid to them;
- copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4P, W-4(SP), W-4S, and W-4V) and amounts of tax deposits made and acknowledgment numbers for deposits made by Electronic Federal Tax Payment System®;
- copies of returns filed and confirmation numbers; and
- records of fringe benefits and expense reimbursements provided to their employees, including substantiation.
For more information, see federal Publication 15 (Circular E), Employer's Tax Guide.