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Samantha O
Level 1

First time having employees

I have a cleaning business and always I’ve had contractors which file W9 and then give them 1099 Nec at the end of the year. I have never withheld taxes before. Now, we have a person who wants to be employee and wants me withhold taxes, social security and Medicare. She wants to file W4 and receive W2 at the end of the year. So, my question is what I have to do to do all these? How much withhold, how often? Where to reflect this withhold in Turbo tax ? Do I have to put money too? Is yes, what is the benefit? Thanks. Samantha O

1 Reply
conniem123
Employee Tax Expert

First time having employees

Hi Samantha,  The recordkeeping and reporting to the IRS is very different when you have employees instead of independent contractors.  Whey you have employees you need to do payroll, or have a payroll service, that will 1) issue the paycheck and have the withholdings submitted to the IRS and state agency if applicable, 2) submit quarterly payroll reports, 3)  submit annual payroll reports, 4)  issue Form W-2 to the employees.

 

You will want to use an accounting system that handles payroll too, or you will need to use a payroll service provider.

 

If you are self employed, here is a great resource for self employed individuals and includes self employed individuals with employees.

 

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

 

I hope this is helpful!

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