Essential IRS Publications for Startup Employers
This guest post by Robert W. Ditmer was originally published on Justworks.
The Internal Revenue Service is truly the best source for reliable payroll information for employers, because of how federal tax law structure works.
The IRS: Tax Law Educator
Congress passes tax laws that become part of the Internal Revenue Code (IRC), often without any clear idea of how they can be implemented on a practical basis. The next step in the process is incorporating the regulations that implement the IRC in the Code of Federal Regulations (CFR).
At this point, it’s up to the IRS to determine how the regulations will to be implemented, and to educate taxpayers. It accomplishes that task by preparing publications that explain the tax law and provide direction on how to apply it in within a business.
The IRS’ publications tend to be very clear, and often contain practical examples showing how the definitions or regulations are to be implemented. The following is a list of essential IRS publications for employers: all of which can be downloaded or accessed from the IRS website.
Publication 15, (Circular E), Employer’s Tax Guide — This one provides all of the basic information that a business must have if it has employees. Publication 15 defines employees, wages, and supplemental wages, and provides instructions on how to withhold taxes from employee’s wages and deposit them. This publication is so important that years ago it was automatically mailed to employers each year.
Publication 15-A, Employer’s Supplemental Tax Guide — The information in Publication 15 is basic, but Publication 15-A provides details on such subjects as independent contractors, special forms of wages or compensation, sick pay, etc.
Publication 15-B, Employer’s Tax Guide to Fringe Benefits — A fringe benefit is a form of pay in addition to wages. It can include such things as insurance, use of a company vehicle, awards, dependent care assistance, etc. Some fringe benefits are taxable, and some are not. The tax laws regarding fringe benefits are found in many different places in the IRC, but this publication puts all of the information in one convenient place.
Publication 505, Tax Withholding and Estimated Tax — Although this publication is directed toward employees, the information in Chapter 1 can be useful to employers in explaining why taxes are withheld from certain payments.
IRS Withholding Calculator —This isn’t a publication; it’s a website. The IRS advises that employers should not help employees complete Form W-4. If an employee needs help to complete the form, employers can direct the employee to this website and Publication 505.
Keep this list handy as a resource for you and your team.
Robert W. Ditmer has over 35 years of experience as a payroll specialist and a professional bookkeeper. In addition to running his own consulting and tax preparation business, he worked as a Controller or Financial Manager for several different companies, and has been active in educating other payroll professionals through his writing and speaking engagements.
JustWorks is a technology platform that helps entrepreneurs grow and manage their businesses by offering a comprehensive one-stop-shop approach for self-service payroll, compliance, and benefits (including health insurance, commuter benefits, and 401k).