For this reason, W-2 is also known as the Wage and Tax Statement.Įvery year, you send a W-2 to the IRS and distribute a copy to each employee so they can use it to fill out their tax return.įorm W-4, on the other hand, is known as the Employee’s Withholding Certificate. As the employer, you fill out a W-2 each year, while new employees fill out Form W-4 before they go on your payroll.įorm W-2 tells the IRS how much you paid your employees during the year and how much you withheld from their paychecks for tax purposes or other benefits, such as health care. The main difference between the two is who fills out the form. W-4īoth W-2 and W-4 are forms the Internal Revenue Service (IRS) requires. Glad you asked! Here’s what small business owners need to know. Once you get used to all your new tax responsibilities, you can get back to feeling great about your expanding business. So, let’s knock out one of the big questions: “W-2 vs. Hiring employees is a sign of business growth, and it’s actually quite exciting. But, as an employer, both tasks are part of the routine that keeps your business running. Running payroll and filling out employer tax forms weren't probably the dreams that launched your small business.
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