What You Need to Know about the W-4 Form

The W-4 is necessary for every employee that works for your company, but many small business owners don’t know a lot about this form. If you are hiring employees, then it is important that you take a moment to understand more about this form and what it means.

What is the W-4 Form?

W-4 is the nickname for Employee Withholding Allowance Certificate, which is a tax form used to indicate the amount of money that needs to be subtracted from each paycheck for taxes. Each employee needs to fill out the form based on their individual circumstances, then the withholdings are subtracted from each paycheck and the money is sent to the IRS.

This form needs to be filled out when the employee is hired, and it is essential that you keep the form on file. It is designed as a worksheet to help each person determine the right amount of withholding tax that should be sent directly to the federal government. The goal of the withholdings is to reduce the amount of taxes that will need to be paid when the employee completes their annual tax paperwork each year.

Information on the W-4 Form

Many employees aren’t sure about the information that should be entered on the W-4 form, so it is likely that they will have questions when they are filling it out. The form will request information about their legal name, address, social security number, marital status, claimed dependents, income, and more.

If a person lists a higher number of dependents, then it means that less money will be withheld from each paycheck. The goal is to get as close as possible to the right number, to avoid withholding too much money or creating a situation where the individual needs to pay a lot when they file their annual taxes.

Once these W-4 forms are filled out by your employees, then you need to provide this information to your small business bookkeeper or payroll service. This information will be used on an ongoing basis when paychecks are calculated and distributed. There are times when employees might request to change their W-4 form to update the number of allowances, and you can resubmit the information to your business bookkeeper as needed.

There are many advantages to hiring a small business bookkeeper to help with the financial management of your company. If you need assistance with payroll processing or other financial services, then we invite you to contact us at Easier Bookkeeping to learn more: (888) 620-0770