1099′s are becoming more and more popular with businesses and individuals as the employment norms continue to shift, but some things must be kept in mind – and now is just the time to be keeping them in mind!
1099s are the easiest way to keep track of how much you paid individuals or small businesses and are essential if you plan on claiming the money spent as an expense.
Typically, 1099 forms have to be filed in the final week of February – that is if the filing is by paper. If filing electronically the deadline is typically 30 days later. In 213, the deadlines are February 28 if filing by paper and April 1 2013 if filing electronically.
If you are not quite ready yet (there can be a lot of reasons small businesses get behind on their paperwork) the government has actually streamlined the procedure. You just need to file a Form 8809, electronically or by paper, before the due date on the 1099 would have been. This will give you a 30 day extension. There is another 30 day extension available for hardship causes, but it is not easy to get.
The first one is automatically granted as long as the Form 8809 is filled out and mailed before the due date on the 1099s.
You must also be careful of how you send them – other than the post office, the only recognized carriers are the big three.
DHL Express (Same Day Service option only), FedEx (multiple services available) and UPS (also multiple services available). No other carrier can be used to send the forms in.
Also, if you have over 250 forms you must file the forms electronically.
The penalties for late filing can add up rather quickly, starting at $30/form and increasing to $100/form for all forms filed after August 1, 2013 or not filed at all.
There is also an intermediate step, $60/form, which is used if the form is more than thirty days late but is filed prior to August 1 2013. The important thing to remember is that it is not too late to file an extension or the forms, especially if you are filing them electronically. In fact, it is almost worth it to file electronically because of the automatic extension built into the system.
1099 forms are the payment method of choice for contractors, and any other business that you do more than $600 with. The 1099-MISC is the 1099 most widely used and when someone says 1099 that is the one that they mean by default.
There are other 1099 designations but they are for very specialized circumstances which do not normally occur.
It is very important to keep close track of your 1099 usage, and it is best to have multiple backups. The IRS does make exceptions for circumstances beyond your control, but it is always better to have this information in at least 2 places.
Now you have a good idea of the basic schedule that 1099 forms work on – there is still time to file, and if you are not ready yet you can file an extension online. We can help you with every aspect of 1099 filing and preparation!