How to Streamline IRS 1099 Filings
In this post, I will offer advice to streamline 1099 filing. I will address auditing your documents, filing requirements, and software tools which may make filing easier.
Auditing Your Records
First, pull on a”transaction list by vendor” for expenditures set to”unspecified.” The precise directions vary depending upon your accounting software. The cause of this report is to make certain that any payments you made do list a vendor.
In case you’ve accepted transactions from your bank feed without adding a payee or vendor, your documents might not be true for 1099 purposes. If there are payments with no vendor listed, correct those documents so that your reports will be accurate for coverage.
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As soon as you have adjusted and verified your transactions, pull a”vendor summary” report. This will list all vendors and the whole amount paid year-to-date. Using this information, evaluate vendors based on the simplified criteria below.
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- Who gets a 1099? You’re expected to issue a 1099 to vendors that you paid more than $600 to in 2018. That includes any person, partnership, limited liability company, limited partnership, or estate.
- How can you understand the company entity of a vendor? When you pay a business or individual, ask a finished W-9 form. The vendor must report its status on that form
- What’s a”vendor”? Any individual or company you’ve paid for services that isn’t your employee.
- Attorneys. You’re expected to send attorneys that a 1099 if you paid them more than $600 during the year.
- What payment method was used? Many of my ecommerce customers pay vendors with credit cards or PayPal. The IRS does not need 1099s for payments you made by credit card, debit card, gift card, or third party payment networks like PayPal. If you pay by these means, you don’t need to issue a 1099. If you did not use a digital method in 2018, you might want to set this up with your vendors for 2019 to prevent issuing 1099s.
Resources for Filing
The IRS website comprises instructions and fillable forms for W-9s and 1099s.
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Cloud-based applications for electronic filing can remove paper headaches. I especially appreciate cloud-based systems since they save vendor information from the previous calendar year. If there isn’t any address change, nothing is needed except incorporating the new payment amount. However, you have to be aware of the vendor’s email address as isn’t gathered on the W-9.
Third-party payroll providers which also pay builders, such as Gusto, will often file your 1099s as part of the services. Otherwise, Track1099 and Tax1099 are top cloud-based 1099 software services.
Preparing 1099s does not have to be a chore. Put processes in place today to review your documents and determine the vendors that need filing. Gather the W-9s (and email addresses), and prepare for smooth sailing in January.