If you’re like me, and your business paid someone at least $600 last year in rents or services, or at least $10 in royalties or broker payments, then the IRS requires you to file Form 1099-MISC to report the amounts you paid.
And, yes, the deadline to send out those 1099s is rapidly approaching.
Hopefully, your bookkeeper has already taken care of all this for you, but if not, here are some tips to help you beat the February 1, 2016 to mail out those 1099s.
Use the APPROVED forms.
The IRS requires that you submit your 1099s using scannable forms, which means that you can NOT just download a PDF from the internet.
As of this morning, January 26th, 2016, you could still pick up a pack of 1099s at Staples in Bend, Oregon, but NOT at Office Depot.
Make sure you have the right info.
These are the key pieces of info for Form 1099-MISC:
- Payer’s Name, Mailing Address and Telephone Number
- Payer’s Federal ID Number
- Recipient’s Federal ID Number
- Recipient’s Name and Mailing Address
- Total Rents, Royalties, Nonemployee Compensation paid to the recipient
A good habit to get into is to have new vendors/contractors provide you with a completed Form W-9 before you pay them. That way you’ll have the info you need to file your 1099s even if they decide later that they don’t really want all their income reported to the IRS.
Beat the Deadlines
Mail your 1099s to your Recipients on or before February 1, 2016.
File your 1099s and your 1096 with the IRS by February 29th, 2016.
Beat the Penalties
If you don’t file your 1099s on time, you could get hit with the following penalties:
- $50 for each 1099 if you file a correct return within 30 days after the deadline.
- $100 for each 1099 if you file a correct return after 30 days of the deadline, but before August 1.
- $250 for each 1099 if you don’t file a correct return by August 1.
The maximum penalties could be as much as $3 million dollars per year!
If Possible, Use Your Accounting Software to Make it Easy
Some accounting programs can automatically pull the total payments and print 1099s. Take advantage of this feature if you can. This can be a huge timesaver if you’re required to prepare a lot of 1099s.
You’ll still need to buy the scannable forms, and make sure that all the info is accurate (garbage in=garbage out) before you print out your 1099 Forms, but this could save you hours of tedious manual labor.
Plan Ahead for 2016
It may be too late to fix your systems for 2015, but if you’re getting bogged down getting your 1099s sent out this year, make some notes and set things in place now to make it easier next year.
So, if you haven’t already filed your 1099s for 2015, get started! Hopefully, these tips will help you get it done on time.