1099 season always seems like it is just right around the corner. Here is an article that can provide you with some ideas to think about prior to this season.
As a small business owner, your time probably is in high demand each day, week and month due to all of the different types of tasks you have to perform or at least oversee.
That’s why it is always best to be prepared for the month of January each year as this is the month you have to process 1099 forms and distribute copies to your contractors and all associated tax agencies, mainly the IRS.
1099 requirements by the IRS seem to be tightening each year and thus you cannot afford to wait until January to begin preparing for this task, which can seem endless at times.
Here are some thoughts for part 1 of this 1099 advice series:
- How are you paying your contractors?
- If you utilize a 3rd party payment service such as Gusto, Venmo, Paypal or Zelle, then keep in mind of the 1099-K requirements prior to your own 1099 work here.
- Should you process a 1099-NEC or 1099-MISC form?
- These two types of 1099 forms normally should cover the bulk of your 1099 tax filing requirements for your small business; however you must understand the critical difference between the two forms as the requirements related to these forms have had massive recent changes, and this may continue.
- Are there any backup withholding requirements for any of your contractors whom you pay?
- If you don’t understand this, then you run the risk of being charged back taxes later on.
- How are your contractors filling out the associated W-9 forms?
- Are they claiming to be some sort of corporation?
- Are they entering in an EIN even though the business name may just be their own name?
- Are they entering in an SSN even though they list both their name and a business name on the W-9?
- Are your contractors actually completing the latest edition of the W-9 form?
- Does the W-9 form list a correct address? Is it a mailing address or the location address?
Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.