SOURCE: Payroll On A Budget

payroll processing, internet payroll, small business payroll, payroll tax, w-2, payroll service

March 18, 2013 18:07 ET

Payroll On A Budget, a National Payroll Processor, Outlines Little Known IRS Rules That Trip Up Small Businesses

Is W-2 Season Really Over?

DALLAS, TX--(Marketwire - March 18, 2013) - Many small employers breathe a sigh of relief on February 28 each year when all the required IRS forms have been filed. But, they may not be through with employee W-2 forms, according to Payroll On A Budget.

The IRS form-filing saga may continue if:

  1. the W-2 forms you mailed are returned by the Postal Service;
  2. a current or former employee complains that there is a mistake on his or her W-2; or
  3. an employee claims that they never received the W-2 form you mailed.

"Not handling W-2s properly is an annual concern for small businesses," explained Charles J. Read, Jr., CPA, president of Payroll On A Budget. "Small employers who try to do their own payrolls can easily run afoul of IRS regulations since their focus is on running their companies, not on keeping the IRS happy. This is when online payroll servicing companies like Payroll On A Budget make life easy for business owners. We know the regulations and how to straighten out the problems."

If the postal service returns the mailed W-2, it can be handed to the employee. If the address is wrong, the employee can still file the form. The IRS doesn't care about the address, but you should update your company records. Should an employee claim he or she didn't receive the mailed form, the easiest thing to do is to reprint it.

It is an entirely different situation if the returned W-2 form belongs to a former employee. You will need to keep that returned copy on file for four years as proof that you attempted to deliver it. There is one exception: if the W-2 can be produced electronically through April 15th four years after it was issued, you do not need to keep undeliverable copies.

"Many employers are surprised to learn that the IRS requires companies to keep copies of all W-2s for four years -- for current and former employees," noted Read. "If you file paper copies, this means keeping hard copies in your office. It's also good practice if you use a payroll service, to ensure each year that you download and save the electronic copies from your provider. We've found many clients who switch payroll providers are often caught off-guard as they cannot recover older W-2 files from a previous payroll provider."

Correcting other errors on the form requires different actions, depending on whether the company has already filed the employer copies with the Social Security Administration (SSA) or not. If the employer copies have not been filed, the company can simply make the correction and issue a new W-2. If the company has already filed its W-3 report with the SSA, a form W-2C (correction) must be given to the employee and also filed with the SSA.

"One of the benefits of using a payroll service not only is the accuracy and simplicity of payroll records but also the timing of filing reports," Read continued. "Many small employers use paper payroll forms and their filing date is February 28. A growing number of small companies use online payroll services who handle records electronically, where electronic filings are not due until April 1." 

About Payroll On A Budget

Payroll On A Budget, the leading online payroll processing services company, provides secure, paperless payroll solutions for small businesses with 1-10 employees. One of only a few payroll firms with a Certified Public Accountant on staff to assist clients, the company was designed to save business owners time and money by providing payroll reports and tax filings, direct deposits or debit card loads, year-end W-2s, and employee self-service tools as standard services. Payroll On A Budget offers affordable prices of $19.95 per payroll plus $1.25 per employee for standard services.

Established in Lewisville, Texas in 1991 by a CPA and former Marine, the company serves clients in more than 40 states and territories and enjoys an "A" rating with the Better Business Bureau. For more information, please visit or call 972-353-0000.

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