Let’s talk 1099-MISC forms.
Commonly forgotten or misunderstood by businesses, Form 1099-MISC is often the oversight for those looking to pass the tax season with flying colors. Which begs the question: did you submit the 1099s that were due this year?
Hopefully you filed them on time (they were due January 31st). If not, you can still submit them, but you may face a late filing penalty.
To help you process them accurately and on time next year, here’s everything you need to know about the 1099-MISC.
What is Form1099-MISC?
In most cases, a 1099-Misc is issued to report a payment over $600 made to a non-incorporated individual or partnership who performed a service for your business. For example, if your business hired a freelancer to redesign your website for you and paid them $650, your business is then liable to report that expense through a 1099 by January 31st, the following year.
You need not report if the work was done by an employee, valued at less than $600, or if payment is made via credit card or through a third party such as Paypal.
How to File Your 1099
It is commonly misunderstood that the responsibility to file a 1099-MISC form lies with the worker, rather than the business that hired them. However, the opposite is true and any business that fails to report the expense can be penalized.
In order to file a 1099 form, tax information must first be collected from the person with whom you are working – adding yet another reason to the list of why every business should get into the habit of requesting W-9’s from them upfront.
If your business has hired someone without their tax information, pause all work, send them a W-9 form immediately, and do not issue payment until the form is completed. Failing to do so can result in an inability to file a Form 1099-MISC at the end of the year.
After you have their tax information, the rest is easy! Simply enter into your accounting software the person’s name, address, and tax ID number (SSN or TIN). When it’s time to process 1099s, you can run a report of subject payments and process your forms.
If you find keeping track of all your bookkeeping and tax information a headache, we understand and would love to help. Contact us at (310) 534-5577 or [email protected] to see how we can make things easier.
