January 31 is the deadline to have W2 forms to your employees. Unfortunately entrepreneurs often make errors when completing them, so I’m going to share what to look out for so these errors can be avoided.
If you have an employee and are doing the payroll calculations yourself, you may have mistakes on the forms and not even know it. One of the typical errors is mismatching names and social security numbers. Filing W2 forms with incorrect social security numbers means that the earnings won’t be properly credited to the worker. This could lead to reduced benefits to the employee down the road.
To avoid this mistake, have the employee verify the information prior to submitting. Sometimes the W4 form the employee filled out when hired was not easily legible and a number was misread. You can also contact the Social Security Administration to verify the number you have is correct. More information on how to double check can be found here.
When filing, make sure the total wages reported match the four quarterly 941 and year-end 940 FUTA reports filed. The Social Security Administration cross references reports to W2 forms and a notice will be mailed if figures aren’t an exact match. Sometimes types of pay are missed on the forms in error. Make sure all wages (including vacation, sick pay and bonuses) are included.
W2 forms should be completed with a computer if possible in order to be properly scanned. Handwritten forms may not be able to be read. When filling out the forms, do not put dollar signs in the boxes. The scanner may read this a an “8” giving an improper salary amount.
Once all W2 forms are completed, the data needs to be compiled into summary information on the W3 form. Double check your math to make sure all figures are entered correctly.
Software is usually available at local office supply stores to help with the printing if you prefer to computer generate the forms. Make sure all the data is entered correctly before processing.
Double checking the information to be filed will most likely prevent you from receiving mis-match notices from the Social Security Administration. Take the extra time to verify your figures prior to submitting the forms. You’ll be glad you did.