An information return is a necessary tax form that must be submitted by businesses, financial institutions, or any other third-party entity, and it is used to keep government agencies and taxpayers apprised of their taxable payments. For instance, as a small business owner, you are liable to file information returns whenever you make certain operating payments, some of which include both employee and non-employee compensation.
In this respect, you would need to file information returns, like 1099-NEC and W-2 forms, which are useful in allowing the IRS to adequately keep track of an individual’s tax liability. There are also many other types of useful information return forms that are used to report transactions from education costs to stock transfers. However, when it comes to small businesses, the most common forms include the W-2 form, the 1099-MISC form, and the 8027 form.
If you run a restaurant business, you will need to file the W-2 form, which is used to show how much you paid an employee and how much money you withheld from their wages for taxes. If you make payments to vendors, you will need to file a 1099-MISC form for covering miscellaneous income. Moreover, if your employees happen to earn tips, you may need to file an 8027 form to report how much they earned.
You have to remember that failing to file information returns can often lead to being fined or penalized. Also, these returns are often due at the beginning of the year, with the W-2 forms due by January 31st, whilst the 8027 and 1099-MISC forms are due by February 28th if you file by mail, and due by March 31st electronically.