Running a successful business takes many hands, and no doubt, you and your employees are capable of so much. But more and more, small businesses need contracted workers, or independent workers who are paid specifically to do a job under a contract for an agreed rate of pay, to come up with new ideas, or to take long-outstanding projects to completion. As straightforward as it seems, maybe the most difficult part of working with a contractor is simply figuring out what to do when it comes to processing 1099s for tax compliance. Avoid penalties and unnecessary headaches by processing your forms correctly.
Are you filing a 1099 for contractors this tax season?
If you’re worried about the processing 1099s for your contractors this tax season, you’re not alone. Small businesses are hiring contractors more than ever.
But let’s face it. Filing 1099s for contractors isn’t always the first thing on your mind. And organization is paramount — it’s all about keeping your records straight throughout the year. That said, if you haven’t been in the position to track everything you need for tax season, here are a few tips and tricks to get the job done right without question this tax season.
4 ways to make processing 1099s a breeze:
Every situation is different, but in a very standard contractor case, wherein you are paying someone for a project without controlling where, when, and how they get said project done, here is what you need to do:
1. Double check your records. Make sure you have a W-9 for your contracted workers. If your contractors have not received this form, send it as soon as possible.
2. Update contractor information. Better safe than sorry when it comes to taxes. Make a quick call, or email your contracted workers to ensure you have their updated info.
3. Get that paperwork. Go to the IRS website and get the official 1099 forms to send to your contractors.
4. Send out the correct forms. Send a Form 1099-MISC to everyone you have employed as a contractor this year that you’ve paid at least $600 this year. To avoid the paperwork, file it electronically. Send out the forms no later than February 1. Electronic filing is due March 1. Don’t forget to also send out your 1096 to the IRS — this form summarizes your returns.
If you need help documenting, tracking, and properly filing your 1099 contractors, AccountingSuite can help. AccountingSuite is designed to assist business owners in processing 1099s for contractors and vendors with the collaborative accounting function. Work in real-time with your team, and set a centralized arena for your data in the cloud.
When it comes to taxes, never rely on guesswork, and don’t stress over processing your contractor’s 1099s this year. Work with your accounting professional, and click here to learn more about AccountingSuite’s collaborative accounting function and more.