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Retail Businesses: Year-End Payroll Checklist (2026)
Year-end payroll for retail businesses is W-2s and any 1099-NEC to employees and contractors by January 31, the fourth-quarter 941 and annual 940, and the retail business items that decide which boxes are right: IRS Publication 15 (2026), section 12, IRS Publication 15 (2026). BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Retail business items that shape the W-2 and 1099s
A seasonal employer that pays no wages in some quarters does not have to file Form 941 for those quarters, but it must check the Seasonal employer box on Form 941, line 18, on every Form 941 it files. Otherwise the IRS expects a return for each quarter.
Employees must report cash tips to the employer by the 10th of the month after the month the tips are received, and no report is required for a month in which tips are less than $20. Tips of $20 or more in a month are subject to social security and Medicare tax, and reported tips of $20 or more are also subject to FUTA.
Commissions, bonuses, and overtime pay are supplemental wages. When paid separately from regular wages to an employee who had income tax withheld in the current or preceding year, the employer may withhold a flat 22 percent, with no other percentage allowed under that method.
The January calendar
W-2s and W-3 to the SSA and copies to employees by January 31; 1099-NEC for each contractor paid $2,000 or more in the year, the threshold for tax years after 2025, by the same date; Form 940 and the fourth-quarter 941 by January 31 as well, with a 10-day extension where all deposits were on time. Ten or more information returns of any kind, counted together, must be filed electronically. For retail businesses the reconciliation that matters is that the pay codes for high turnover and new-hire volume, multi-location payroll and seasonal overtime spikes landed in the right W-2 boxes for every employee.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- A seasonal employer that pays no wages in some quarters does not have to file Form 941 for those quarters, but it must check the Seasonal employer box on Form 941, line 18, on every Form 941 it files. Otherwise the IRS expects a return for each quarter. [IRS Publication 15 (2026), section 12]
- Employees must report cash tips to the employer by the 10th of the month after the month the tips are received, and no report is required for a month in which tips are less than $20. Tips of $20 or more in a month are subject to social security and Medicare tax, and reported tips of $20 or more are also subject to FUTA. [IRS Publication 15 (2026), section 6]
- Commissions, bonuses, and overtime pay are supplemental wages. When paid separately from regular wages to an employee who had income tax withheld in the current or preceding year, the employer may withhold a flat 22 percent, with no other percentage allowed under that method. [IRS Publication 15 (2026), section 7]
Read the full guide to how to handle year-end payroll and W-2s, and the rest of the retail business payroll library.
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Frequently Asked Questions
Year-end for retail businesses: IRS Publication 15 (2026), section 12
A seasonal employer that pays no wages in some quarters does not have to file Form 941 for those quarters, but it must check the Seasonal employer box on Form 941, line 18, on every Form 941 it files. Otherwise the IRS expects a return for each quarter.
Year-end for retail businesses: IRS Publication 15 (2026), section 6
Employees must report cash tips to the employer by the 10th of the month after the month the tips are received, and no report is required for a month in which tips are less than $20. Tips of $20 or more in a month are subject to social security and Medicare tax, and reported tips of $20 or more are also subject to FUTA.
When are W-2s and 1099s due for a retail business?
January 31 for both, to the recipient and to the SSA or IRS. The 1099-NEC threshold is $2,000 for tax years after 2025, and 10 or more information returns of any type must be e-filed.
What does managed payroll cost for a retail business?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. High turnover and new-hire volume, multi-location payroll and seasonal overtime spikes are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Retail Businesses. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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