It's that time of year again - year end! And one of the things business owners often dread is preparing 1099's for their subcontractors and other vendors who provided them with professional services during the tax year. Did you know you could use QuickBooks to make your life so much easier?
What is a 1099-MISC?
A 1099-MISC form is used to report miscellaneous income to the IRS.
This form is used for:
w Income earned by an independent contractor but not an employee
w Fees, commissions, rents, or royalties paid
w Payment for prizes, awards, or legal services
w Excess golden parachute payments
w Medical and health care payments
Who gets a 1099?
You must send a 1099 to any individual or LLC that you paid $600 or more to as a non-employee. Some examples of who you may have to give a 1099 to are subcontractors, your accountant, lawyer, or someone else providing a service for your business.
There is a lot more to this whole 1099 thing, so make sure you visit the IRS site using the link below to fully educate yourself on this topic.
When do you issue 1099's
The 1099-MISC must be submitted to the payee by January 31 of the following year (this year it’s actually February 2nd), and it must also be submitted to the Internal Revenue Service (IRS) by the end of February.
How to Prepare 1099's
If you’re using QuickBooks, you can actually prepare, print and electronically file your 1099’s right from within the program.
If you’re going to print them, you just need to pick up laser forms from Staples, or some other office supply store. If you are going to file electronically, then you’ll need to create an Intuit login and password, and then you’ll be able to print 1099’s on blank paper for your recipients and file the forms electronically for a reasonable fee, that’s pretty much the same cost of purchasing the forms at the store. And filing electronically is so much easier. I helped a client last week to file her 1099’s, about 10 of them. Last year it took us 1 or 2 hours to review the totals in QuickBooks, and then get them aligned and printed properly. This year, it took us 15 or 20 minutes, so it’s definitely worth doing.
Once you submit your 1099’s electronically, you’ll receive confirmation from the IRS when they’ve been accepted.