What you need to know about Form 1099-MISC
For business owners, the beginning of the New Year means the start of getting all their Form 1099’s submitted. There are many types of Form-1099. The one we will focus here is the Form 1099-MISC. This is the form you need to fill out for every contractor and company you paid for services of $600 or more in one calendar year ( except payments to a corporation including a limited liability company (LLC) that is treated as a C or S Corporation).
But here’s the curveball. You will also need to fill out a Form 1099-MISC for any person or unincorporated entity you paid royalties of $10 or more and if you made direct sales of at least $5,000 of consumer products to a buyer or resell anywhere other than a permanent retail establishment. There are a few more special conditions; you can read all about them here.
There are two important dates for the Form 1099-MISC set by the IRS. For 2016, a Form 1099-MISC must be filled out and sent to the non-employee by February 1 because January 31 is on a Sunday. A copy of those forms must be sent to the IRS by February 28, or if filing electronically, by March 31. Individual states may have varying filing deadlines, so check with your state requirements.
So how hard is it to fill out these Form 1099 MISC? Not hard, if you had all your contracted service providers fill out a W-9 prior to starting work. You need the basic information, Name, Social or EIN and Address and the total amount paid in one calendar year. Simple enough right? Well, it all comes down to how organized are you with all your data.
AccountingSuite can definitely make it a much simpler and smoother process. Your vendor’s contact information is stored in AccountingSuite when you first added them to the system. AccountingSuite will assist you by tracking the payments made to each entity you need to file a Form 1099 for throughout the year. When you are ready to file, simply run the 1099 report within AccountingSuite and upload the file to our partner Track1099* for the creation and distribution of the forms. Click, click and done!
Now what happens if you forget to issue a Form 1099? The penalty varies from $30 to $100 per form depending on how long past the deadline you issued the form, with $500,000 maximum per year. And if you intentionally disregard the requirement to provide a Form 1099, you’re subject to a penalty of $250 per form with no maximum.
Interested to learn more on managing, distributing and submitting your 1099-MISC Forms? Please join us for a webinar January 26 at 11am PST. Sign up here.
*Track1099 is a fee-based service