1099

1099-MISC Best Practices

Do you get surprised at end of year when all the sudden your bookkeeper starts asking you about W9s and subcontractors and verifying addresses and amounts? Or -- even worse -- do you have no idea what I'm talking about?

This may be a nasty shock, but bear with me: you are required to file a 1099-MISC Form to any person or entity that you pay more than $10 in royalties or more than $600 in rent, service, prizes, income, etc. (See the whole, ten part list here, on page 1 under Specific Instructions.) If you think for a second about every one you pay more than $600 in this calendar year, the list can get pretty long. But there are some big exceptions that will ease the burden. The following do NOT get 1099-MISC forms from your business.

  • Employees
  • Corporations that are treated as C or S corporations
  • Payments for merchandise
  • Attorneys
  • See the rest of the list here, on page 1 and 2 under Exemptions.

But wait, there's more (or, rather, less). Here's a quote from Intuit:

Beginning with tax year 2011, the IRS requires you to exclude from Form 1099-MISC any payments you made to a 1099 vendor by credit card, debit card, gift card, or a third-party payment network such as PayPal.

So, who are the likely candidates for 1099s? In our experience with small businesses, subcontractors and labor (other than employees) whom were paid by check are the biggest source of 1099 creation. If you pay anyone, who is not a corporation, for services via check or electronic transfer more than $600 in one year, then you need to generate and send them a 1099-MISC right when the new year rolls around. This will especially include people whom you paid to remodel, repair, or maintain anything for your business or office. Anyone whom you commissioned for goods for your internal use (not for sale) or work and who is not on payroll will require a 1099-MISC.

We've been around the block before and we've filed a whole lotta 1099s. We're writing this to you in the summer on purpose. Here are our best practices for a midyear check on your 1099-MISC process.

1. Midyear 1099 Summary

In the summer, run (or have your bookkeeper run) a 1099 Summary for the year so far. Review this report for a few things:

  1. Are any of these vendors corporations? If so, cross 'em off.
  2. Are all of your subcontractors, outside services, and nonpayroll laborers on this list? If not, go find them!
  3. For the vendors on this list, do all of the amounts look correct? Are there missing payments?
  4. Are there any vendors that you know should be 1099 eligible that are missing from this list? If so, track down their info.

2. W9 Check

For every one on that 1099 Summary, do you have the W9 information? (Name, address, SSN/TIN.) If not, have them fill out this form so you can generate them a 1099-MISC at the end of the year.

3. W9 Practice

Make it a habit to get W9s filled out prior to paying anyone money for services, rent, etc., have them fill out a W9 form. This will help you avoid that end-of-year scramble for information, which is especially difficult when you're trying to get a hold of a vendor whom you paid back in January and it's eleven or twelve months later! Those people are hard to get a hold of, trust me. Get their W9 filled out now and save yourself a massive hassle.

4. Select your Processing Method

Choose how you will file your 1099s. If you have a bookkeeper, they will probably have a system for this and you just need to verify that they have 1099s on their radar. If you are filing yourself, you may want to fill out the 1099s by hand come end of year or use a software to electronically file, like TurboTax or Intuit.

All the information about 1099-MISC forms is available at the IRS website. If you have any further questions, check out the publications here.

 


Don't have a bookkeeping system?

Give us a call, check out our services page, or set up an appointment with Jackie, our official manager of onboarding!

quickbooks-online-essentials-and-quickbooks-online-plus

Move to the Cloud? QBO vs. QB Desktop

So, you’re thinking about QuickBooks. A lot can be said about having a computerized bookkeeping system. It provides so much capability for reliability, business management, and financial organization. Many of our clients are small businesses, with no particular passion for accounting, who need the financial drudgery out of the way of their creative or entrepreneurial process, and they use a QuickBooks product.

But which QuickBooks product is the best?

While Sweeten CPA has many, many combined years of QuickBooks Desktop expertise, we are embracing the shift to QuickBooks Online. Continue reading “Move to the Cloud? QBO vs. QB Desktop”

Screen Shot 2017-09-19 at 2.32.05 PM

Sales Tax Tips for QBO Users

We’ve talked previously about using the Texas Comptroller’s website to file your sales tax, which you can find here, but where do those numbers come from? How do you keep track of taxable sales? Where do you find your total sales for the quarter or the month?

For QuickBooks Online users, don’t miss this video, which will answer these questions by walking you through where to find the important numbers that enable you to file your sales tax.

Still have questions about your sales tax? Call in and schedule an appointment with a professional.

Screen Shot 2017-09-19 at 2.32.05 PM

The Time After The Most Wonderful Time of The Year

It’s that time again, folks: time to prepare for tax season! Before too many days of 2016 pass you by, follow the steps below to have the best, most stress-free, and punctual tax season yet!

Set Aside:

As you get documents in the mail over the next few weeks, you should create a place for them to collect before you send them in to your CPA. Make it a place that is easy to access but out of the way, so the documents won’t be bothered. Remember to scan these or hand them in to us before February 15th for corporate returns and March 15th for personal returns. Here are some things you should keep an eye out for.

  • W-2s
  • 1099s
  • End of year loan statements
  • 1098s
  • W-3s
  • End of year statements from bank, especially with amount of money earned on savings accounts for the year
  • Health insurance statements: don’t forget that legislation is changing all the time on this. Tax returns and bookkeeping are taking up more time to compensate for the new policies. You’re trying to figure this out and we’re here to help. We need to know how you received insurance, how much, by whom, which family members, and what dates, at least. Send us your insurance premiums, whether paid out of pocket, reported on your W-2, or paid from your company– the more information we have, the better.
  • And more! If it looks important, it’s better to send it to us than not!

 

Write Down:

Before you forget, write down or gather together this important information that Sweeten CPA will need to complete your return:

  • Total mileage for 2015!maxresdefault.jpg
  • Business mileage
  • Business expenditures from personal accounts
  • And more! If you have any questions, shoot us an email

 

Happy Tax Season and we’ll see you soon!

 

Screen Shot 2017-09-19 at 2.32.05 PM

Should I do my company’s payroll?

Payroll Time!Congratulations! Your new business venture is doing well and it’s time to start paying yourself a salary and possibly even hire an employee. You ask yourself, “I wonder if I can just do the payroll myself?”

Or let’s say times require belt-tightening in your company’s budget. To save money, you consider ditching your payroll service in favor of tackling it yourself “for free.”

What is our recommendation?

Unless you were previously a payroll accountant and have extra time on your hands, then we would urge small business owners not to take on payroll themselves. We have the utmost confidence in the competence of good small business owners, but if payroll is not your core business, the cost/benefit ratio will almost always be in favor of hiring out this pesky task to professionals. Continue reading “Should I do my company’s payroll?”

Screen Shot 2017-09-19 at 2.32.05 PM

Bookkeeping (Don't go it alone: let us help!)

Death by bookkeeping

You own a small business. The best strategy is to stay involved with everything to ensure all goes perfectly, right? Wrong! The side details, while very important to your business’s success, can cause you to feel or become bogged down, depriving your business of its strategic leader’s honed (and sane) efforts.  Continue reading “Bookkeeping (Don't go it alone: let us help!)”

Screen Shot 2017-09-19 at 2.32.05 PM

Year End Accounting: 7 steps to make your books ready for the new year

Out with the old, in with the new! But before you get to making your new year’s resolutions, make sure this year ends with a good finish. We have 7 steps to get your business ready for a new year the best way possible: by finishing this one correctly!

  • Step 1: Reconcile your Accounts

Continue reading “Year End Accounting: 7 steps to make your books ready for the new year”

Screen Shot 2017-09-19 at 2.32.05 PM

Your Car as a Business Expense

Insurance salespeople, architects, realtors, contractors,  and property managers; these are just a few of our clients that use their personal car to get from business point A to business point B.  As a business owner, if you use your personal car to drive anywhere needed to conduct business (to a meeting, client site, post office, office supply store, etc.) these miles are deductible to you as an expense.

So let’s cut to the chase. The whole process is made more complex by the fact that there are two ways to account for your car expense. Which one is better? Each situation is individual (of course!) so you will need to weigh each option. Or get a CPA to help you weigh each option. (Us?)

Continue reading “Your Car as a Business Expense”

Screen Shot 2017-09-19 at 2.32.05 PM

New Mileage Rate for Second Half of 2011

You aren’t the only one who has noticed the sky rocketing prices at the pump. The IRS has noticed too. That’s why the federal mileage reimbursement rate has been raised from $0.51 a mile to $0.555 a mile starting July 1, 2011. (That’s right, that’s a half of a cent at the end.)

Continue reading “New Mileage Rate for Second Half of 2011”