January is fast-approaching, and that means it is almost time to send out 1099’s to some of your vendors. Check out my latest video for more information or continue reading below!
To whom are you required to send a Form 1099-MISC?
As a general rule, you must issue a 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments on or before January 31st for the preceding year. You do not need to issue 1099’s for payments made for personal purposes. You are required to issue 1099-MISC reports only for payments you made in the course of your trade or business. You’ll send this form to any individual, partnership, Limited Liability Company, Limited Partnership or Estate.
What are the penalties?
The penalties for not doing so can vary from $50 to $100 per form ($185,000 for the year), depending on how long past the deadline the company issues the form. If a business intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $250 per statement, with no maximum.
What should I be doing to be prepared?
You may want to get a head start by having your 1099 vendors complete an IRS Form W9 which is required for reporting purposes.
What if I have questions?
Please contact us with any questions you may have about this requirement by visiting our website at https://prosperitybookkeeping.net/contact/
Prepare your business for year-end paperwork with these handy checklists: