Business owners: Ready for 1099 reporting?
There are more than a dozen variations of the information return known as Form 1099. Most are specific to certain industries. But nearly every company, large or small, has to issue Form 1099-MISC.
Don't forget: You have to send a copy of 2017 forms to both recipients and the IRS by Jan. 31, 2018.
Why 1099-MISC exists
You use Form 1099-MISC to report miscellaneous payments to nonemployees. This includes fees for services provided to your business by independent contractors, such as consultants, lawyers, maintenance workers and others.
Generally, you don't report fees paid to corporations, but there are exceptions. For example, payments to lawyers must be reported whether the lawyers are incorporated or not.
What you'll need for reporting
December is the perfect time to start assembling what your company will need to meet the reporting requirements:
* A list of recipients
* Recipient taxpayer ID information
* Corporate/noncorporate status verification
Getting a head start now will eliminate a last-minute scramble in January.
The penalties for failing to file start at $50 per form. There is no maximum if the IRS decides you intentionally disregarded filing deadlines.
Give us a call if you have questions about 1099 filing requirements that apply to your business.