Business owners must issue a 1099 by January 31st
If you made a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. Business owners must issue a 1099 for each person they paid at least $600 in rent, services, prizes and awards, or other income payments. 1099s must be submitted to the IRS by January 31st and may be filed either electronically or by mail. Typical forms include…
- 1099-NEC (Non-Employee Compensation)
- 1099-MISC
- Other 1099 forms as needed
You are NOT required to file a 1099 if any of the following situations apply:
- You are not engaged in a trade or business.
- You are engaged in a trade or business and
- the payment was made to another business that is incorporated, but was not for medical or legal services or
- the sum of all payments made to the person or unincorporated business is less than $600 in one tax year
What happens if I don’t file a 1099?
Failure to file a 1099 will result in penalties imposed by the IRS. The penalties range from $50 – $580 per form as well as a potential late penalty fee depending on how late you file (So, for example, if you had 10 contractors who should have received a 1099, that could be $5,800 in penalties.). The IRS may also impose an accuracy-related penalty that’s equal to 20% of your underpayment. As you can see, failure to file could have a significant impact on your business.
How does it work?
Need help filing your 1099s? Our Business Services team can take care of this for you. Here’s how it works…
1) Prior to December 31, gather and confirm the information needed to complete the forms (recipient’s name, tax identification number, street address, email address, and amount paid)
2) Complete the Storen Financial 1099 Request Form. If we processed the 1099s for your business last year, we will be sending you a summary list in late December for you to update and approve.
3) Upload the completed form to your Storen Financial client portal. (Click here to access the client portal.) Don’t have a portal, contact us and we’ll set you up! (Click here for contact info.)
4) We will then mail the completed 1099s to each contractor/recipient and provide you with a summary copy of all 1099s sent.
(Click here for 1099 preparation pricing information.)
(Click here to view or download the 1099 request form.)
Please contact our Business Services team if you have any questions or need additional information.
Am I Required to File a Form 1099 or Other Information Return?
Article from IRS.gov
“If you made a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. Receipt of certain payments may also require you to file an information return to the IRS. This page is applicable to specific and limited reporting requirements.” Click here for more information from IRS.gov.
Blog by Penny Snyder – Business Accountant
Learn more about Penny and the rest of the Storen Financial team here.