Advantages of Running Payroll as a Seasonal Employer
Posted on Fri, May 13, 2011
If your business only operates during certain seasons, you may qualify as a seasonal employer for payroll tax purposes.
For example, you may hire a few employees to help run your concession stand or pick apples in your orchard. While they may only work for you for a few months, you still have to deduct taxes from their paychecks and keep records of their payroll. But your payroll reporting requirements may be different than a small business that runs year-round. As a seasonal employer, you have the same withholding requirements as any other employer. The good news is that you only need to file an Employer’s Federal Tax Return (Form 941) for the months that you had payroll for your employees. (But you do need to follow the right steps with the IRS.) For example, if your employees only worked in June, July, and August, file a 941 to report the payroll taxes withheld and deposited from the second quarter (your June payroll) and for the third quarter (July and August payroll). You don't need to file returns for quarters in which you paid no wages, such as the first or fourth quarters in this example, but you need to tell the IRS that you’re a seasonal employer. On Form 941, you must mark the box “seasonal employer” (part 3, Line 19) if you anticipate that you won’t have employee payroll for certain quarters. Checking this box will notify the IRS that you intend to file a return only for some quarters in the future. To avoid penalties, mark this box every time you file a 941. That way, the IRS won’t expect a 941 report from you every quarter (but they won’t mind if you send one anyways.) You can get more information on the seasonal employer classification at the IRS web site.