What You Need to Know About 1099 Reporting
For most businesses, the end of a year is a busy time. It's important that you get your business off to a good start in the new year by closing the books on the prior year and preparing and filing the 1099 forms by the end of January.
Every business must file 1099 forms for each year that certain payments are made to noncorporate recipients. Most small businesses are familiar with Forms 1099-INT (the form used to report interest paid in the course of a trade or business) and 1099-MISC (used to report payments of rents or services).
The first thing to know about thses forms is when they apply. Interest paid in the course of a trade or business is reported on 1099-INT when the amount paid totals $600 or more to any payee. The 1099-MISC is used to report payments of rents or services of $600 or more in any one year to a payee. A Form 1099 is generally not needed for payments to corporate vendors other than attorneys and corporations providing medical and health care services. Some of the more common needs for a Form 1099-MISC are landlords, cleaning services, trade contractors, consultants, and professional services.
Form 1099- INT The Difference Is Planningsm
You will be in a better situation if you do some work agead of time to prepare for the annual filingand helps you avoid the last minute rush to identify who needs to receive a 1099-MISC and what their current address and taxpayer ID number is. Prepare early by assembling the list of recipients. Verify if they are a corporation or not and obtain their taxpayer ID in addition to their address information. You won't have everything at this time to complete the filing - you won't know the dollar amount to report until after year-end - but doing the prep work early will save you precious time later on by having what you need to complete your filing requirements quicker.
Most small businesses have at least one or more nonemployees to whom they have paid $600 or more during the year.
Similar to 1099-INT, many businesses have to scramble to find out who needs to receive a 1099-MISC and what their current address and taxpayer ID number is at the last minute. Here again, you can If you avoid the usual panic by preparing ahead of time. Start now to assemble the list of recipients, verify if they're a corporation or not, and obtain their taxpayer ID and address information.
Contact our office if you need more information on your 1099 reporting requirements.