Business Tax Planning
A Guide to Arizona's Employer Tax Reporting Requirements
Taxes are a looming presence in the lives of all business owners. Even if you outsource your tax planning and preparation to a qualified professional, there are still plenty of reporting issues to consider throughout any given tax year.
When it comes to employer tax reporting in Arizona, there are specific requirements you should be aware of to ensure compliance with state law. Here, we share the basics of employer tax reporting in Grand Canyon State. However, you should always speak to a tax expert to make sure you are following proper procedures for your specific business.
The Importance of Record-Keeping
First and foremost, Arizona law heavily prioritizes record-keeping. The state mandates that all employers, regardless of whether they're liable to pay unemployment taxes, must maintain meticulous records for the most recent four calendar years. Required records include:
Check stubs and canceled checks - Keep a record of all check payments, including all checks made out to employees and any canceled or voided checks that were never cashed.
Cash receipts and disbursement records - Document your financial transactions, including all cash receipts and disbursement records. These are especially crucial if you find yourself being audited.
Payroll reports - Maintain a record of your payroll transactions. Most of today's small business accounting software will automatically generate these reports for you.
General ledger reports - Although the concept of a general ledger might initially conjure images of a pioneer-era general store, it is still an important component of successful small business financial management.
Again, though, your accounting software system is likely to have the capability to generate automated general ledger reports for you.
Copies of tax records and employee details - Archive copies of tax reports, including employee W-2 forms, filed with federal and state agencies. Ask each agency for guidelines on how long to maintain these records in your possession -- seven years is often used as a general rule of thumb.
Furthermore, for each payroll period, you should record details like the beginning and ending dates, total remuneration paid, and the date of each payment. Also maintain records of your workers' identifying information including their name, Social Security number, hiring and termination dates, and remuneration data.
Miscellaneous accounting records - Be prepared to maintain additional records as required by your industry. If, for instance, you own a restaurant, inventory records might be necessary. And, if you operate an e-commerce business that sells across state and international borders, nexus tax reports could come into play.
Keep Up With Changes
Change is constant in regard to both business best practices and the tax code. On the business ownership side, failing to report changes promptly can result in unforeseen costs, including a variety of tax penalties, down the road.
Whether you're selling your business, closing up shop permanently, acquiring another business, undergoing a change in ownership, altering your legal structure, or simply changing your business name or address, timely reporting is key to avoid tax problems down the road. Each of these changes can result in tax changes, and ensuring you promptly notify the right Arizona taxation department is not only a legal requirement but a vital step in maintaining a well-organized and compliant business.
To make reporting changes easier, Arizona provides a Report of Changes (Form UC-514) that is sent with your quarterly Unemployment Tax and Wage Report (Form UC-018). You can also use the online Tax and Wage System (TWS) or contact the Employer Registration Unit. When reaching out via phone, it's advisable to follow up with a written confirmation or an email.
Informing Your Employees
Arizona law also places obligations on employers regarding employee information rights. You must post a Notice to Employees (POU-003) or Aviso a Los Empleados (POU-003S) in your place of business. This notice provides your employees with valuable information about the Unemployment Insurance program.
Additionally, should one of your employees become unemployed, you're required to provide them with a printed statement containing information about filing for unemployment benefits. Ensuring your employees are informed and aware of their rights is heavily prioritized in Arizona.
Compliance with employer tax reporting requirements in Arizona is vital for smooth business operations and avoiding potential penalties. Remember, staying up-to-date with these requirements is a step towards financial stability and peace of mind.
Feature Image Credit: DustyPixel/Getty Images
Earl B. Shanken
Earl B. Shanken has been a CPA in Arizona for over twenty years. After completing his bachelor's degree in accounting at the University of Arizona, he worked in public accounting in the Phoenix area. Eventually he became a supervisor in the small business division of the firm. He started his own business in 1990 with the intent of creating a firm to provide comprehensive services for small businesses. Earl has devoted his time to establishing that type of service for his clients. He has received the Certificate of Educational Achievement in Estate Planning offered through the Arizona Society of Certified Public Accountants. He is a former member of the board of directors of the Chandler Chamber of Commerce and was recently named "Volunteer of the Month".
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