Do This Before The Holidays: How To File Your 1099
Before we get started, I want to be very clear about one thing: I am NOT a tax advisor, tax attorney, or accountant. The information I list below is purely for educational purposes, and should not be taken as legal or tax advice.
As I mentioned in this post, while there are certain things you must do to make sure your business is legally sound heading into the new year, there aren't many actual deadlines to be aware of, except for two:
You need to know if you need to become an S-Corporation before the end of the year.
You need to file your 1099 by January 31.
So, how do you know if you need to file a 1099?
You must issue a 1099-MISC for any unincorporated person for services related to your business to whom you paid $600 or more. This applies if you paid them via cash, check, or bank transfer. This is due by January 31st.
How do I file a 1099-MISC?
Begin by making a list of those persons who performed services for your business, to whom you paid $600 or more. These will commonly be virtual assistants, contractors, etc.
Second, send them a W-9, to collect their Taxpayer ID Number (EIN), the name of their business, and their address.
Then, I would recommend creating an account at 1099online.com. This website is incredibly easy to use- if you go to my Instagram, I've created a video series walking you through the exact steps of filling out the form. However, you will need to enter your own business name, and the rest of the required "Payor" information, and the same for each "Payee". Go to box 7, and enter the amount of money you paid to that contractor. Also note that if you paid an attorney over $600 in the taxable year, you will need to fill out the same information in box 14. Finally, choose to have the 1099 mailed to the contractor and file.
A few things to note:
If you do not file your 1099-MISC, you may be subject to a penalty by the IRS.
If you paid via PayPal or another third-party merchant, that company is responsible for filing their own 1099-K**
**As of 2019, PayPal is no longer an exclusion, and even if a contractor is paid via PayPal, a 1099 must still be filed.
