{"id":690,"date":"2012-01-10T15:24:00","date_gmt":"2012-01-10T15:24:00","guid":{"rendered":"http:\/\/vhfinancialmanagement.com\/?p=690"},"modified":"2012-01-10T15:25:51","modified_gmt":"2012-01-10T15:25:51","slug":"1099s-oh-joy","status":"publish","type":"post","link":"https:\/\/vhfinancialmanagement.com\/2012\/01\/10\/1099s-oh-joy","title":{"rendered":"1099s Oh Joy!"},"content":{"rendered":"
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Happy Happy Joy Joy\u2026.Happy Happy Joy Joy! Stick a hot poker in my eye, and you\u2019ll understand my feelings about the reporting requirements for small business owners and the 1099. While I understand the concept and reasons for this reporting requirement, it\u2019s simply a pain. Ok, I\u2019ll get of my soapbox, stop complaining, and deliver the lowdown. <\/p>\n

If you are a small business owner and pay an individual or business more than $600 in a year, you (the business owner) will need to send that business or individual a 1099. This reporting requirement is put in place to allow the IRS a means to track income for business owners, which can lead to additional revenue for the coffers\u2026.and the coffers need revenue!
\nThe small business owner is also required to submit a document called a 1096 to the IRS summarizing all the 1099s reported. <\/p>\n

Exceptions<\/strong>
\nThere are some exemptions and exceptions to the amounts listed above. For example, if you pay someone more than $10 in royalties, a 1099 must be sent. If you pay an incorporated company, you do not need to mail a 1099. If you pay an attorney more than $600, even if incorporated, you must supply a 1099. For a complete list of guidelines, click here<\/a> to review the filing instructions from the IRS.<\/p>\n

Important Dates<\/strong>
\n1099s need to be received by recipients on January 31st or earlier.
\n1096 (transmittal to the IRS from the business) must be received by the IRS on Feb 28th or earlier.<\/p>\n

Helpful hints<\/strong>
\n\u2022\tIf you pay someone more than $600 a year, have that person complete a W-9. This document simply asks for the necessary information to complete and properly report a 1099. You can find an IRS copy of a W-9 here<\/a>.
\n\u2022\tKeep up as the year goes on. As the year progresses, it may be helpful to track your expenditures to see who you are paying and how much. If someone is getting close to the $600 mark, have them complete a W-9. Remember, it\u2019s easier to ask someone to complete this form prior to paying them!
\n\u2022\tTrack expenses with software. This is the best way to assist in the above scenario. <\/p>\n

Conclusion<\/strong>
\nIf you are a small business owner, it\u2019s important to follow the appropriate protocol. There are many exceptions, exclusions, and details when it comes to 1099 reporting, and the worse thing to do is nothing. Be proactive and speak with your tax preparer to determine if you need to file this informational return. The IRS is cracking down and penalties are on the rise. So jump in\u2026.the water\u2019s uncomfortable, but it\u2019s better than the alternative. Stay proactive and keep your business compliant.<\/p>\n

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