Because the yr is coming to an finish, take a couple of minutes to make your tax preparation in January go easily. One of many earliest tax deadlines of the brand new yr happens on January 31, which is the submitting date to the U.S. Inner Income Service of 1099s out of your distributors.
On this submit, I’ll supply steerage to streamline 1099 submitting. I’ll tackle auditing your data, submitting necessities, and software instruments that may make submitting simpler.
Auditing Your Data
First, pull a “transaction record by vendor” for bills set to “unspecified.” The precise instructions range relying in your accounting software. The rationale for this report is to make sure that any funds you made do record a vendor.
When you've got accepted transactions out of your financial institution feed with out including a payee or vendor, your data will not be correct for 1099 functions. If there are funds with no vendor listed, right these data so your stories can be correct for reporting.
Upon getting corrected and verified your transactions, pull a “vendor abstract” report. This can record all distributors and the whole quantity paid yr-to-date. Utilizing this info, consider distributors based mostly on the simplified standards under.
- Who will get a 1099? You're required to concern a 1099 to distributors that you simply paid greater than $600 to in 2018. That features any particular person, partnership, restricted legal responsibility firm, restricted partnership, or property.
- How have you learnt the enterprise entity of a vendor? Once you pay an organization or particular person, request a accomplished W-9 type. The seller is required to report its standing on that type
- What's a “vendor”? Any individual or firm you could have paid for providers that isn't your worker.
- Attorneys. You're required to ship attorneys a 1099 in case you paid them greater than $600 through the yr.
- What cost technique was used? Lots of my ecommerce shoppers pay distributors with bank cards or PayPal. The IRS doesn't require 1099s for funds you made by bank card, debit card, present card, or third-social gathering cost networks resembling PayPal. For those who pay by these means, you don't need to difficulty a 1099. In case you didn’t use an digital technique in 2018, you might need to set this up together with your distributors for 2019 to keep away from issuing 1099s.
Assets for Submitting
The IRS website accommodates directions and fillable types for W-9s and 1099s.
- W-9 directions (PDF).
- W-9 type (PDF).
- 1099 directions and types.
Cloud-based mostly software for digital submitting can remove paper complications. I particularly worth cloud-based mostly methods as a result of they save vendor info from the prior yr. If there isn't a tackle change, nothing is required besides including the brand new cost quantity. Nevertheless, you should know the seller’s e mail tackle as isn't collected on the W-9.
Third-celebration payroll suppliers that additionally pay contractors, similar to Gusto, will typically file your 1099s as a part of their service. In any other case, Track1099 and Tax1099 are main cloud-based mostly 1099 software program providers.
Getting ready 1099s doesn’t should be a chore. Put processes in place now to evaluate your data and decide the distributors that require submitting. Acquire the W-9s (and e-mail addresses), and prepare for clean crusing in January.