By now, you might have seen a few articles on the web reminding you to file Form 941.
What exactly does that mean?
If you’re a small trucking business owner you might be confused on whether or not you need to file Form 941.
Let’s clear a few things up.
941 Quarterly Report
IRS Form 941
Form 941 is a quarterly form used to report employment taxes.
All employers in the United States are responsible for withholding federal income tax, social security tax, and Medicare tax from each employee’s salary.
IRS Form 941 is also used to calculate the employer’s portion of Social Security and Medicare tax.
We are currently nearing the third quarter 2019 Form 941 deadline. Employers must file Form 941 by October 31, 2019 to avoid penalties.
To file 941, you’ll need both employer and employee details regarding your trucking company.
Form 941 and Your Trucking Company
Technically, if you’re an owner-operator and have no employees under you, there’s no need to file 941.
However, S-corporations, also known as S-corps, work a little differently.
S-corps are taxed on a pass-through basis, much like a sole proprietorship or partnership.
Because of that, the corporation does not pay taxes on its profits, but rather, those profits pass on to shareholders who are then taxed as part of their personal income.
An S-corp may have no employees in the traditional sense of people working for the business without ownership stake, but for tax purposes, any shareholder who performs a duty for the business may be treated as a shareholder-employee.
The money each shareholder receives in dividends may be treated as income.
The 941 quarterly report also becomes relevant when a driver has an S-Corp and is paying himself a W-2 salary.
No matter what type of business your trucking company is, if you’ve chosen to hire help in the form of independent contractors, you do not need to file 941.
Technically, independent contractors are not your employees. You are only responsible for paying them a gross wage determined by the contract.
The reason for this is that a business withholds and pays taxes on behalf of all employees, and has an obligation to pay employment taxes on wages paid to employees.
In contrast, there are no taxes for a business to withhold or pay independent contractors. They need only pay the compensation amount agreed upon in the contract.
The bottom line is that if you own and operate a business with employees, you’ll need to file IRS Form 941. Every trucking company is required to file 941’s for all of their W-2 paid company drivers.
2019 Form 941
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If you’re still unsure if you need to file 941 for your small trucking business, give the TaxBandits live support team a call at 704-684-4751.
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