Always in line with the holiday season, 1099 season is here! In preparation for the 1/31/22 1099 deadline, here are some things business owners can do now to make the process easier and less burdensome as we move into 2022.
After all, the beginning of a new year is a great time to start fresh, focus on strategy, and plan for achieving the year’s business goals. The less time you have to spend gathering documents and wrapping up loose ends from 2021, the more time you have to focus on your business.
Let’s start with a simple question.
Do I have to issue a 1099?
If you paid a contractor (any person or business that is not a corporation) in excess of $600 during the 2021 tax year, and they aren’t on payroll or had tax withheld, you must issue a 1099 for each of these parties.
There are a few exceptions, and if you have questions, we are happy to answer them.
So, what do I need to do?
You accountant needs two pieces of information for each contractor that should receive a 1099.
First is the total amount paid to each contract during 2021. If your accountant is also managing your books, they will have access to this for you.
Second is a W-9 for any party who is to receive a 1099.
A few best practices…
There are a few things you can do to make the process easy.
- Throughout the year, if you know you are going to be paying someone over $600, get the W-9 up front so that you have it on file. This will save you from an end of year scramble to send out and collect W-9s.
- Keep your W-9s organized so they are ready to send to your accountant at the end of the year, or get them on file with your accountant throughout the year as you receive them. If you do the latter, it’s one less thing to check off your list of tasks at the end of the year…when you should be winding down and enjoying the holidays.
- If you don’t have a W-9 on file for everyone, get it done now. Reach out to your contractors and send them a blank W-9.
What your accountant does…
Once your accountant has the amounts and the W-9s for each contractor, they will create the 1099s. You can choose to have your accountant mail the 1099s directly to recipients, or send them to you to send out. If you are using a payroll company, they may be the ones handling 1099s for you. In either case, the deadline for having them issued and postmarked is 1/31/22.
Harper & Company’s deadline for receiving information required for issuing 1099s is 1/24/22.