Startup Tax – File 1099s for contractors
Attention startup founders! There are so many things to learn and do, and so little time to work on them. However, worry not, we understand your pain. If filing 1099s is one of the top priorities on your list right now, consider this a cheat sheet on all the things you need to know on successfully filing 1099s.
1. When is the deadline?
Usually it is the last day of January, for this year it is Jan 31st, 2020. If you file your 1099s late, the penalty is $50 per 1099; the penalty amount increases when time goes on. So don’t delay, file your 1099s today or pay the consequences.
2. Who to issue a 1099 to:
You need to issue a 1099 to: Any independent contractor or vendor who is a self-employed individual AND has paid over $600 in a calendar year (from January 1st – December 31st).
*Please note: C-corp and full-time employees DO NOT need to issue a 1099. 1099s only applies to freelancers, contractors, single member LLCs and S-corp. Lucky for you though, you have this article to remind you.
3. Information needed to file 1099s:
1) Name
2) Addresses
3) Email addresses (if delivering by email)
4) Employer identification number or Social security number
You can either ask your contractors/vendors for the required information above, or send an empty W-9 form that is issued by the IRS for your contractors/vendors to fill out.
We recommend collecting the four pieces information listed above when you first start working with a contractor/vendor, it is always easier to collect information before they start working, and makes the process a whole lot easier too.
4. Which software to use for tracking and issuing 1099s:
- QuickBooks Online (QBO)
One of the more convenient way to file 1099 is by using QuickBooks Online. QBO tracks, issues, and files 1099 payments electronically. QuickBooks Online makes the 1099 filing process very easy and efficient, you don’t have to manually mail out anything (is that not convenient or what?).
Now you have learned the framework on how to file a 1099. Hopefully, this information will help you when completing your work. The goal here is not to teach you to become an accountant overnight, but to know what to look for when getting things done. This article is great reference if you are reviewing the work for filing a 1099.
We are going to cover a section on how to trouble shoot issues while filing 1099s, and we might do it in another blog sometime in the future. In the meantime, if you have any immediate questions relating to filing 1099s, feel free to reach out to us at: hi@advisori.finance. We will be more than happy to help you out.
