With February 1st approaching, it is time for 1099 filing. There is a need for attention to details and avoidance of possible mistakes as you fill the form 1099. There are penalties for every form that you fail to send out before February 1st ends, with the penalties increasing with each passing day.
In this Part 2 post I want to provide you with:
- Tips to Help You Determine Who Needs a Form 1099
- Due Dates to file the tax forms
- Resources
If this is your first experience with 1099’s let me share some insight. The IRS requires all independent contractors that you paid during the year more than $600 to file form 1099. As the business owner it is your responsibility to cross check your vendor files for the form W-9 for those independent contractors so that you can track the EIN and mailing addresses.
This process doesn’t have to be difficult and if you don’t have one yet, I recommend starting today with a process for every contractor you do business with. You can create a process via a spreadsheet record or the better solution is within your accounting software.
Tips to Help You Determine Who Needs a Form 1099
- To start, look through your payment history for anyone who received more than $600. Suggested vendors to start with: your landlord if you pay rent, lawyers, accountants, service and repair contractors, and professional service consultants. Payments made to a Corporation are excluded to receive form 1099, the best way to find out is to call and check with the vendor. For clarity review the IRS definition of Independent Contractor vs. Employee.
- Now that you have determined who you need to provide a 1099-MISC form to, now verify if you have their W-9 on file. If not you may want to send them a letter of request.
- For users of QuickBooks, identifying vendors to issue 1099s is easy. If you have your vendors flagged accordingly you can run a report.
- For those that are DIYs or not using an accounting system, 1099s are not just about downloading from the IRS website. Forms and envelopes either need to be purchased (OfficeMax, Staples, or mainly any office supply store) or, you can order a 1099 packet online at IRS.gov. Once you receive the triplicate forms you need to fill out the information per vendor according to the 1099s along with a 1096 and then submit to the IRS.
To difficult, don’t fret! Contact AGC and we can provide you with that service.
Resources:
Things to Keep in Mind with Independent Contractors
Is Your Business Ready for 1099s Filing’s: Part 1
Topic 762 – Independent Contractor vs. Employee
Online Ordering for Information Returns and Employer Returns
Where is a look at a W-9 to download: Request for Taxpayer Identification Number and Certification