When a business wants to hire new personnel, it must notify specific federal government agencies so the candidate’s legal ability to work in the United States can be verified. Once that happens, a government agency will need to send paperwork—such as W-4 forms for employees and 1099s for independent contractors—to ensure that their wages are being taxed appropriately. This set of responsibilities is known as payroll reporting.
Similarly, payroll record-keeping refers to the mandate requiring employers to retain records of all employment contracts, timecards, tax documents and payroll distributions and independent contractor payments.
Additionally, corporations are legally responsible for withholding appropriate federal, state and local taxes from their employees’ wages and documenting the deductions. Companies are then required to forward the resulting tax revenue and paperwork to the appropriate government agencies.