The deadline for sending 1099’s is January 31st. By preparing now, you will be ready in January.
What is a W9?
A W9 is an informational-only form that you ask your vendors to fill out and return to you. This provides you with the information needed to determine if they should get a 1099, as well as their address and taxpayer ID number.
What is a 1099?
This is a form that shows how much you paid to independent contractors during the previous year. You are required to send it to both your independent contractors and to the IRS.
Who gets 1099s?
Any individual (or LLC not taxed as an S corp) to whom you paid more than $600 total for services during the year. This includes office help, IT services, social media assistance, website developers, CAD providers, laborers such as painters, wallpaper installers, upholsterers, handymen, cleaning and repair people, installers, art hangers, and delivery people. You must also report payments to attorneys and non-corporate individuals for rent you paid. You only report amounts paid for services provided, not for the purchase of merchandise. For example, if you have someone who makes pillows, but you provide the material and inserts – that is a service and should be included in a 1099. If you are buying pillows that she made with her material and inserts, that is merchandise, and no 1099 is needed.
What happens if I don’t do this?
The IRS can fine you for failure to comply. The fines may be significant.
What should you do now and what can you expect from us?
Think back through your year, and if you think you paid someone who fits the above requirements, ask them to fill out and send a W9 back to you. Once they return it, send it to us. Ideally, anytime you use a new vendor, ask them to submit a W9 form before you pay them. I will send additional information in mid-January and prepare and send the 1099’s on your behalf.