Tax and Recordkeeping Tips for Businesses With Seasonal and Part-Time Employees

Some businesses see surges during different parts of the year while others may only be open during parts of the year. These businesses will hire seasonal employees to cover the limited time they are needed. Whether you’re hiring seasonal or part-time help during this time, it’s important to know the different recordkeeping and tax procedures that apply to these employees.

We previously talked about recordkeeping requirements from the employee’s perspective, but we want to make sure businesses are well-equipped as well. There are many similarities between seasonal employers and regular employers, but you don’t want to mess up the subtle differences some businesses miss and get yourself in trouble with the IRS.

Tax withholding

Whether an employee is full-time, part-time, or seasonal, the tax withholding responsibilities for the employer remain the same. This means you will withhold the same taxes from a seasonal employee as you would any other employee with your organization.

When you file a Form 941 to report payroll taxes for your employees to the IRS, you will report for the seasonal employees as you would for other employees. The key difference, however, is that if you do not have employees for the full year you will check the “seasonal employer” box (number 18 on the form).

Tax liability

The Form 941 is a quarterly form, but if you have quarters in which you have no employees, you will owe no employment taxes for those quarters.  This means that, as long as you check the seasonal employer box as noted above, you will not have to submit the form during those quarters in which you had no employees, since your employees are seasonal.

If you do this, the IRS won’t come after you for the quarters in which you did not submit the form as you already indicated to officials that certain quarters will have no tax liability for seasonal employees. It’s important to check the box on every single Form 941 you submit if you are a seasonal employer. Failure to do so could raise some flags by the IRS.

W-4 or W-9 forms

Regardless of the term of your employees or what role they serve, it’s best to have every employee that earns wages fill out either a W-4 form or a W-9 form.

A W-4 will inform you what amount of taxes should be withheld from each paycheck. The W-9 form applies to any contractors you hire, so if your seasonal workers are contractors then you should become familiar with the W-9 form.

Form 1040-SE

If you have your own business, even if it is closed during part of the year, or does not have employees, you will need to fill out Form 1040-SE to report self-employment taxes. This applies also to all independent contractors.  This means you should keep track of all receipts, payments, quarterly tax documents, and any other necessary business financial information.

Attorney Robert V. Boeshaar has experience working with businesses of all different shapes and sizes. We understand the many different ways employers need to fill positions to keep their company running successfully.If you’re a seasonal employer in Washington who needs help navigating your dealings with the IRS, contact our team of tax experts today. We help individuals and small businesses resolve their disputes with the IRS.