Seasonal Businesses

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This is Portia Bingham.

I'm talking with Phyllis Grimes about seasonal business income and recordkeeping.

Phyllis, can you explain what seasonal means, and give us some examples?

Many business ventures throughout various times of the year are considered seasonal.

Seasonal help is what's often needed for sporting events, holidays, and commercial fishing or harvest seasons.

It can include fireworks stands, Christmas tree sales, haunted houses, pumpkin patches and many other business activities.

With the holiday season approaching, now is a great time for those with seasonal businesses to familiarize themselves with the tax requirements for seasonal employers, and maintain good recordkeeping habits.

Are there special rules that apply to seasonal businesses?

Whether you're getting paid or paying someone else, questions often come up about the tax treatment of payments for casual labor, temporary help and seasonal help.

Keep in mind, seasonal employees are subject to the same tax withholding rules that apply to other employees.

Do you have any hints for seasonal employers?

If you're a seasonal employer, you haven't paid wages and you don't have a tax liability, you aren't required to file the quarterly Form 941.

So, on Form 941, you should check the box for "Seasonal Employer" which is above line 1, to let the IRS know you don't have a filing requirement.

The IRS will then mail two Forms 941 per year after March 1.

My best advice: it's never too soon, or too late, to start good recordkeeping habits.

You should keep all receipts, payment information and tax information in one location to make filing your taxes easier when the time comes.

Although you are required to keep tax records for three years, in some cases you may want to keep them even longer.

Where can a business find more information on seasonal employment?

Go to our Web site at IRS.gov and just type the words "seasonal help" in the search box.

For more information on your tax responsibilities as an employer, refer to IRS Publication 15, Circular E, Employer's Tax Guide.

However, if you have farm workers, follow the rules in Publication 51, Circular A, Agricultural Employer's Tax Guide.

How about recordkeeping?

Can you point out some resources for that?

On IRS.gov, type the words "employment tax recordkeeping" in the search box for some excellent resources.

Publication 583, titled "Starting a Business and Keeping Records," has some really good information on recordkeeping.

You can download it from our Web site.

Thank you, Phyllis.

I've been talking with Phyllis Grimes of the IRS.

This is Portia Bingham.