Everyone knows that filing late or not at all will result in penalties, but not everyone knows that errors are costly as well. Mistakes are often made on 1099 forms and each particular error can rack up the penalties costing your company more money.
1099 Mistake #1: Sending them too soon: Most people assume that sending your 1099’s ahead of time is a good thing, but this is far from the truth. Sending your 1099 to the IRS before the due date can cause massive issues for your employees as well as yourself. Should there need to be corrections made, the “see corrected” box is often missed by the IRS and they count each 1099 separately and will send tax due notices to your employees.
1099 Mistake #2: Errors in amounts – It’s extremely easy when running through a stack of 1099s to skip a zero or add one. In this instance it looks as though your employees made more or less money than they actually did, and they run the chance of incurring extra expenses if the error is not recognized.
1099 Mistake #3: Missing an employee – When you have hundreds of employees it’s easy to make mistakes. Sometimes employers miss an employee, thus landing the employee in hot water with the IRS and cause a massive paperwork snafu for you as well.
The best way to avoid these common pitfalls is to have a professional service prepare your forms for you. At Online File Taxes, we pride ourselves on diligent work at a respectable cost. Check out our website for more information.