Tax season is almost here and along with it comes the requirement for businesses to send out 1099s. While this can be a tedious task – especially if you haven’t kept good records on your independent contractors – it is necessary to avoid penalties.
If you paid $600 or more to any “non-corporate” independent contractor or to an attorney, you are required to:
- Send each such party a Form 1099-MISC by January 31
- Submit copies of all the 1099s you’ve sent to the IRS by February 28 (except if you report income in Box 7 of the 1099-Misc, “Nonemployee Compensation,” the due date is January 31)
Note that independent contractors include any unincorporated entity, including Limited Liability Companies (LLCs). Service providers such as accountants, and even some consultants, are LLCs and therefore must receive a 1099 from you.
The list of exceptions to this requirement can be fairly confusing, so give us a call at 201-655-7411 if you have questions about whether a particular vendor or contractor should get a 1099.
Getting W-9s makes completing 1099s easier
For each 1099, you will need the party’s mailing information and Tax ID number. If you haven’t done so already, request that each of your contractors or vendors complete IRS Form W-9, which gives you this information. Retain the completed W-9s in your files.
Best practice tip: We recommend that you do not issue payment to a vendor until a properly completed and signed Form W-9 is returned to you.
Let KRS CPAs prepare your 1099s
Rather than guessing at IRS rules and requirements, why not let the KRS CPAs tax experts help? We will help you organize Form 1099 recipient data and prepare all the necessary forms for you to submit. Contact Kelley DaCunha at [email protected] to get started.
If you’re already a KRS client, you will receive your 1099 worksheet the first week of January.