Do I Need to Send Out 1099s?
Towards the end of each year, your accountant may ask you if you need help issuing 1099’s. That often brings up the question: What is a 1099 and how do I know if I need to issue them?
The Form 1099-Misc needs to be issued to many different types of vendors and contractors. You must first determine if your business has paid at least $600 during the calendar year to any individual or business. This does not include your employees, as they will receive a W-2.
Some examples of a person or business who needs to receive a 1099 is a contracted employee, cleaning person, IT support, marketing and graphic design businesses. Some other common reasons to issue a 1099 are for interest paid to investors on their personal loans to your business and any rent paid directly to a building owner.
Exceptions to the 1099 requirement are corporations, including LLCs if they are treated as an S-corp or C-corp for tax purposes. If you are unsure, it is best to ask the business.
Once you determine who you need to send a 1099 to you must collect a Form W09 from them. This form will provide you with the person or business’s name, address, and social security number or employer identification number.
The Form 1099 needs to be submitted to the individual or business, as well as the IRS, by January 31st, 2020. If you have further questions, contact us!