Simplify Year-End 1099 Reporting for Business Owners
Authored by: Jennifer Babcock, CPA & Manager – Cordell, Neher & Company, PLLC
As we are halfway through the year, it’s crucial for business owners to start preparing for year-end 1099 reporting. The Internal Revenue Service (IRS) requires businesses to report accumulated annual payments over $600 made in exchange for services and certain other items.
In this article, we’ll guide you through the key steps for 1099 reporting and highlight recent updates that can streamline the process.
Understanding 1099 Reporting
Business owners are responsible for reporting payments made to individuals and certain entities, excluding corporations and S-corporations. To complete the reporting accurately, you will need specific details for each payee, including their name, taxpayer identification, address, and entity type. Acquiring this information can easily be done by requesting a completed Form W-9 from your vendors. It is recommended to obtain a new Form W-9 each year to ensure you have the most up-to-date information.
New Electronic Filing Requirements
The IRS has recently implemented a new rule stating that businesses must electronically file their 1099s if they send 10 or more forms. This regulation aims to streamline the reporting process and improve efficiency. Electronic filing not only saves time but also reduces the risk of errors and potential penalties. The IRS has introduced a user-friendly service that allows business owners to electronically file their own 1099s, offering convenience and accessibility. To learn more about this service, visit the IRS website.
Ensuring Compliance and Ease
To ensure compliance with the IRS regulations and simplify the year-end reporting process, follow these steps:
- Request Form W-9: Reach out to your vendors and request a completed Form W-9 before making any payments. This form provides all the necessary information needed to prepare your 1099s. Remember that Forms 1099 are due by January 31st each year.
- Track Payments: Maintain an organized record of all payments made to each vendor throughout the year. Tracking payments will help you accurately report accumulated payments exceeding $600 on Form 1099.
- Verify Vendor Information: Regularly review and update the information you have on file for your vendors. Changes in addresses or taxpayer-identification numbers could occur, so it’s important to stay up to date.
- Plan Ahead: Begin the process early to avoid any last-minute rush or complications. By requesting W-9 forms and tracking payments throughout the year, you’ll be better prepared for year-end reporting.
- Seek Professional Assistance: Filing forms 1099 can be complex, and any mistakes can lead to penalties. If you need help navigating the reporting process, consider reaching out to a reputable tax professional or consulting firm.
Year-end 1099 reporting is a crucial responsibility for business owners. By proactively gathering the necessary information, requesting Form W-9 from vendors, and staying updated on the latest IRS guidelines, you can ensure compliance and simplify the reporting process. Remember to take advantage of the new electronic filing option for increased convenience and accuracy. For more information or if you wish to contact our team, visit our website at cnccpa.com. Call any of our qualified advisors, CPAs, or accountants at (509) 663-1661, and we’ll begin helping you, your family, or your business today.
Events & Deadlines
Community Service Day
Cordell Neher & Company, PLLC 175 E Penny Rd #1, Wenatchee, United StatesCNC Newsletter
Subscribe and stay informed on policy changes that could have an impact on you.
Footer Contact
Check the background of your financial professional on FINRA's BrokerCheck®
Privacy & Usage: The information on the Cordell, Neher & Company, PLLC website is provided with the understanding that it should not be substituted, in any way, for consultation with a professional Certified Public Accountant, accountant, tax, legal or other competent advisor. Cordell, Neher & Company, PLLC makes every attempt to ensure that the information contained on their websites are obtained from reliable sources, but is not responsible for any errors and/or omissions or from the results obtained from the use of any information. This site contains links to servers maintained by other organizations. Cordell, Neher & Company, PLLC cannot provide any warranty regarding the accuracy or source of information found on any of these servers, the content of any file the user might use to download from a third-party site, and is not responsibility for the content found on any of these servers or for any links these servers maintain with other servers.
Avantax affiliated advisors may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC, Investment Advisory services offered through Avantax Advisory ServicesSM,Insurance services offered through an Avantax affiliated insurance agency. 3200 Olympus Blvd., Suite 100 Dallas, TX 75019 972-870-6000.
Avantax financial professionals may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services.SM, Member FINRA, SIPC. Investment Advisory Services offered through Avantax Advisory Services SM. Insurance services offered through an Avantax affiliated insurance agency. Method 10® is property of Avantax Wealth Management.SM All rights reserved 2020. The Avantax family of companies exclusively provide investment products and services through its representatives. Although Avantax Wealth Management does not provide tax or legal advice, or supervise tax, accounting or legal services, Avantax representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
The Avantax family of companies exclusively provide financial products and services through its financial representatives. Although Avantax Wealth ManagementSM does not provide or supervise tax or accounting services, Avantax Representatives may offer these services through their independent outside business. Content, links, and some material within this website may have been created by a third party for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth ManagementSM or its subsidiaries. Avantax Wealth ManagementSM is not responsible for and does not control, adopt, or endorse any content contained on any third party website.
This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Investments & Insurance Products: Are not insured by the FDIC or any federal government agency- Are not deposits of or guaranteed by the bank or any bank affiliate- May lose Value
Avantax Investment ServicesSM and Avantax Advisory ServicesSM are not affiliated with CNC Financial Group, LLC.
© 2020 Cordell, Neher & Company PLLC • Designed by Pixel to Press