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At the start of every January, small business owners around the country are scrambling to understand what the requirements are behind the 1099-MISC form and what they have to do. To help make things easier for you, I have broken down the basics behind the 1099-MISC form.
Who do I need to send a 1099-MISC to? Any individual, company, contractor, vendor, etc. that you paid $600 or more to throughout the year in your business. This can include payments for rent, services, prizes, legal, etc. Any personal payments you made are not reportable.
Are there any exceptions? Yes, there are some instances in which you paid a person or company $600 or more but you do not have to issue them a 1099-MISC and those are:
Note: The C or S Corporation exception does not apply for payments to attorney’s.
How do I get the payee information? You might be getting ready to start filling out a 1099 and wondering where you find the required information from your payees. The IRS has a Form W-9 that you can request your payee to fill out. This will be extremely useful for you because it will provide you with the legal name, address, EIN/SSN, and indication if they meet the C or S Corporation exception. You can download a copy of the W-9 form here.
When to file? You must have your 1099s mailed or given to your recipients and submitted to the IRS by January 31st.
What if I don’t file? You can be hit with a per form penalty depending on how long past the deadline you are. If you intentionally do not file, the penalty can be much higher.
Tips Moving Forward
If after reading this you are starting to scramble contacting all of your previous year vendors asking for a W9, you are not alone. However, take this as a lesson so that you can be better prepared for this time next year. Here is a quick hit list to help relieve some stress next January:
If you have any further questions regarding the 1099 Form or any other bookkeeping/tax related items, send me a message, I would be more than happy to chat. Our firm also handles 1099 processing so if you need any help on that end, do not hesitate to reach out.
Mike is the Managing Partner of JETRO and Associates. Mike has spent the majority of his career as an entrepreneur. He was CFO and co-founded several companies and has experience in all business stages. He set out on a mission to help businesses that have seen and lived the same experiences he did in business. This is how JETRO was built. He has been in the shoes of many small business owners out there and his end goal is to help them in one area that most business owners are not familiar with, accounting and taxes. Mike earned his Bachelor’s degree in Business Administration and Masters degree in Accounting. He is a licensed CPA in Wisconsin. He is also a Registered Tax Planner. When Mike is not in the office you can find him spending time with family and friends. He is also an avid sports fan and you can often find him rooting for his Brewers, Badgers, Bucks, and Vikings (yes, it's true).
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