Yes, its time for one of year-ends most annoying tasks.... generating 1099's. They are due to the recipient by January 31st, but Uncle Sam give you until February to get his copy, along with the 1096, out to him.
There are an alphabet soup of various 1099 forms covering everything from the 1099A ( acquisition of abandoned property) to the 1099S (proceeds from real estate transactions.) But the most common 1099 a small business runs into is the 1099MISC. This is the form used to report to the IRS expenses paid throughout the year to independent contractors, service providers, attorneys, and other non-employee compensation.
There are an alphabet soup of various 1099 forms covering everything from the 1099A ( acquisition of abandoned property) to the 1099S (proceeds from real estate transactions.) But the most common 1099 a small business runs into is the 1099MISC. This is the form used to report to the IRS expenses paid throughout the year to independent contractors, service providers, attorneys, and other non-employee compensation.
The typical rule of thumb is that you must issue a 1099MISC to any service provider who is not incorporated, and to whom you've paid more than $600 in the last calendar year. Except for attorneys, who you must issue a 1099 to regardless of how much you spent. Click here for a link to the IRS informational guide for more details.
A couple of tips to make 1099 processing a little easier:
- During the year, as you use independent contractors-- that's your IT guy, your cleaning company, and the woman who developed your marketing campaign,--make it a habit to have them complete a W-9 Request for Taxpayer ID and Certification and keep it on file. This will insure you have full name, address and TIN# come 1099 time.
- Better yet, take that info from the W-9 and put it right into your accounting software. Most programs have a section in the vendor set-up screen asking if they are eligible for a 1099 and requesting their taxpayer id number.
- Taking this one step further, if you go into the options of your accounting software (in QuickBooks you want to go into Edit, then Preferences, and select 1099) you can select the accounts and threshold which are eligible. Now you can easily generate 1099 reporting directly from your software!
Happy Filing!!
