Information Reporting for Your Small Business
The federal government recognizes that you, as a business owner, are in a unique position to know about certain activities and to tell the government about them. This is called information reporting—specifying which individuals or businesses you dealt with in certain ways and the amount of money involved. For example, if you use an independent contractor to perform work for your business, you must report annual payments totaling $600 or more—to the contractor and to the IRS. Other information reporting can include:
- Certain cash transactions—both small and large
- Dividends (if your business is incorporated)
- Pension and retirement plan distributions
- Retirement and employee benefit plans
- Wages to employees
While this reporting doesn't cost you anything (other than the administrative expense of complying with reporting rules), failure to do this reporting can result in high penalties.
