Description

Send us a text

With January fast approaching, it’s important for business owners to start preparing their 1099-NECs. If you want to stay ahead and get everything in order before the deadline, this episode is for you! We discuss whether or not a transaction needs a 1099, what the process for filing is, and what will happen if you missed filing a 1099. 

[01:07] Fast Facts About 1099-NECs

• If your business pays a subcontractor or vendor, whether it’s an individual or a company, a total of $600+, you need to request a W9 so you can send them a 1099-NEC
• If you received a 1099-NEC as a contractor, you must report this income to the IRS
• Be it one-time or accumulative, as long as the total payment is over $600, you need to file a 1099-NEC

[04:05] When It Is NOT Required to File 1099-NECs

• Payments to C or S Corporations
• Employees 
• Payments for merchandise, telephone, freight, or storage 
• Payments to non-U.S. citizens performing work outside of the U.S
• Payments made via Credit Card or PayPal

[06:25] 1099-NEC Preparation Made Easy

• Step 1 – Collect a W9 from all contractors before you pay
• Step 2 – Fill out the 1099-NEC
• Step 3 – Send a copy of the 1099-NEC form to the contractor
• Step 4 – File a copy of the 1099-NEC with the IRS and State (if required)
• For contractors who are  non-U.S. citizens - get an accomplished W8-BEN or W8-BEN-E instead

[08:54] Penalties for Failing to File a 1099-NEC

• 1099-NECs must be filed at the IRS and sent to the recipient by January 31st of the following year
• The fine will depend on how late you are

[10:16] Different Types of 1099s

• There are over 15 types of 1099 forms that are used for various purposes

[12:30] Final Thoughts

• Do that legwork now so you can get on top of the forms needed
• Utilize software to make processing and filing easier

Key Quotes

“If you are the one paying the contractor, you are the one that files the 1099-NEC.” - Mike Jesowshek

“Sometimes it's hard to get a W9 from someone after the fact so just ask for it upfront. Again, one rule of thumb before you pay anyone, collect a W9 from them.” - Mike Jesowshek

Resources Mentioned

• Blog Post: https://www.taxsavingspodcast.com/blog/what-do-i-need-to-know-about-1099s-for-business-owners
• Software: https://www.track1099.com/ 
• Downloads: 
  • IRS: Instructions for Forms 1099-MISC and 1099-NEC
  • IRS: Form 1099-NEC
  • IRS: Form 1099-MISC

--------

Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax

IncSight Packages: https://incsight.net/pricing/

Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale

-------

Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

--------

To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a