Whether you run a small business or a big one, odds are that you’ve used the services of an independent contractor or vendor over the course of the year. While your company generally isn’t responsible for paying taxes for independent contractors, it does have to file a form, a 1099, reporting the amount you paid each vendor or contractor to the Internal Revenue Service (IRS).
Preparing 1099s can seem like another burden your business has to bear. But, the process of doing so doesn’t have to be complicated or costly. An accounting firm in Atlanta can help you through the 1099 process, meaning less headache and stress for you.
Who Gets a 1099?
Part of the process of preparing 1099 forms if determining which vendors need to receive one. The basic rule is that your company needs to issue one to any individual who it paid more than $600 to over the course of the year for services. An independent contractor might be an attorney who provided legal services, a freelance marketing expert, or even the person who kept your business’ books.
People who your company employs don’t receive a 1099. Instead, your business would issue W-2 forms to them, as you paid not only their wages, but also a portion of their taxes.
Not every service provider needs to receive a 1099. If you worked with a corporation, you might not need to prepare a 1099 for it. If the total amount you paid a contractor was less than $600, you don’t need to send him or her a 1099. You also don’t have to send a 1099 to a vendor that you purchased goods or products from, such as the company that sells you paper or office supplies.
How an Atlanta Accountant Can Help You
The process of determining who needs a 1099 and who doesn’t can seem difficult. That’s where an Atlanta Bookkeeper can be helpful. An accounting firm that offers 1099 preparation and processing services takes the guesswork out of completing the forms. The firm is well versed in the rules for 1099 forms from the IRS and is able to determine which vendors need a 1099 and which don’t.
You can hire an accounting firm just to help you prepare 1099s, or you can hire an accounting firm to handle all of your bookkeeping needs, which will make 1099 preparation even less complicated. A bookkeeper who’s already familiar with your company’s accounts and vendors will be able to easily access the information needed to fill out the 1099 forms.
Meeting the Deadlines
When it comes to 1099 preparation and processing, your business has two deadlines to meet. The first deadline is January 31. By that date, your company should have sent 1099s to all the vendors who need to receive one. By the second deadline, the last day in February, your company needs to have sent Form 1096 to the IRS. Form 1096 is used to send copies of all the forms 1099 to the IRS.
Working with a professional tax and accounting firm means your business will meet those deadlines. When you outsource 1099 preparation to an accounting firm, such as Sound Business Services, you can rest assured that all the needed paperwork will be filed on time and without any issues.