1099 Information (2023)

A few important definitions before diving into the nitty-gritty of 1099s:

• Internal Revenue Service (IRS) - The federal agency is responsible for collecting federal taxes.

• Subcontractor- A non-employee individual or a company that provides services or labor for your firm. If they are not incorporated and you paid them more than $600 this calendar year, you will need to report monies paid to them with a 1099.

• Form W-9 - Request for taxpayer Identification Number (TIN) and certification. You use this form to collect information from vendors you hire as independent contractors. It lets you know whether they are incorporated or not. If they are not incorporated a 1099 will need to be sent. If they are incorporated, keep the form on file as proof for why no 1099 was required for them.

• Form W-8BEN - Certificate of Foreign Status for foreign contractors. You use this form to collect information from foreign vendors that you hire as independent contractors.

• Form 1099-NEC - This IRS form is used to report income earned as an independent contractor. They must be sent out by the end of January.

  Business by the Book can file these for you. Information regarding BBTB deadlines are at the bottom of this post.

• Form 1099-MISC - This IRS form is used to report miscellaneous income, such as rent or payments to an attorney. They must be sent out by the end of January.

  Business by the Book can file these for you. Information regarding BBTB deadlines are at the bottom of this post.

WHO?

The IRS states that a 1099-NEC is to report nonemployee compensation, i.e., anyone that is not on your payroll that you paid more than $600 in one year. If you do not pay employment taxes on this person, they must be sent a form 1099. Some examples of individuals or businesses that may receive a 1099-NEC include:

• Cleaning Services

• Graphic Designers

• IT Professionals

• Photographers

• Virtual Assistants

• Bookkeepers

• Accountants/CPAs

• Legal fees

• Business Coaches

• Consultants

• Installers (Tile, Carpet, Appliances, Wallpaper, etc.)

• Consignment Vendors

Important Note - Business by the Book recommends that you always request a completed W-9 form from any of these types of businesses or individuals before you remit payment on their first invoice.

The form 1099-MISC form is now required to report rent paid and any gross proceeds to an attorney.

WHAT?

What is the difference between a W-9 and 1099?

• A W-9 is a form containing information that your vendor provides to you. This includes their Taxpayer Identification Number (TIN) or Social Security Number, their federal tax classification, as well as their full name and address. We use this form to update your vendor files and prep for sending 1099s.

• 1099 is the form that a company will file using the information provided from the W-9. 1099 reports the income that the individual or business earned from you during the year. 1099 is sent to three entities: the IRS, the state government, and the individual. You also keep a copy for your own tax purposes.

Important Note: If you have a foreign contractor, they need to complete a W-8BEN instead of a W-9.

WHEN?

We begin assisting you by reviewing your 1099s in October. It is not uncommon to need to go back and collect W-9s from individuals or businesses. 1099s must be filed by the end of January.

WHERE? AND HOW?

At Business by the Book, we use QuickBooks Online to manage your bookkeeping. The software allows us to track your vendors for 1099-NEC and 1099-MISC. Our Account Managers help our clients remember to collect W-9s from any individuals or businesses that may need 1099.

Important Note: If you pay a vendor with a credit card, the credit card company will report that income on their own 1099 to the vendor. You are only responsible for reporting the vendor income that was paid via cash or check (this includes Venmo, Chase QuickPay, Zelle, etc.).

WHY?

Simply put, the IRS does not like it when people do not report their income. The 1099 that you sent to your vendor is filed with the federal and state government. That way, if a vendor doesn’t report their income correctly, the IRS has proof that the individual is evading taxes.

Additionally, your CPA will often use the 1099s that you filed to help you file your end-of-year taxes. Filing your 1099s correctly is the best way to ensure you are getting the most deductions possible in that category.

AM I GOING TO GET ANY 1099s?

You might! Are you an LLC or sole-proprietor? Have you provided services to any other business? If your services could be considered a business expense for another business, you can expect to receive a 1099 from that business.

Important Note: If you are an interior designer providing services to decorate for an individual or family ie., the Smith Family Residence, you are not going to get a 1099 from the Smith Family. However, if you help ABC Consulting redecorate their office space, you should receive a 1099 from ABC Consulting.

BBTB 1099 FILING INFORMATION:

If you are an active Business by the Book client, we can file your Form-1099s. Service agreements for this service were sent to all active clients on Monday, October 2, 2023.

Upon acceptance of the proposal, your initial filing fee will process ($150). Then in late January, after we have completed the filings for your 1099s, we will process the Form-1099 fee ($25 per Form-1099 filed). The Form-1099 for Business by the Book (Sherry S. Wilson, LLC) is included at no charge.

Your Account Manager will begin reaching out to you with a list of vendors who we are missing a W-9 for. We are requesting to have Form W-9s on file for all of your vendors by December 15, 2023. The final deadline to have your Form-1099s filed on time is Friday, January 19, 2024. Any W9s returned after this date will be filed after the IRS deadline, and additional fees will apply. 

If you require a late 1099 batch filing, we will send a separate agreement. There will be a late batch filing fee ($200), and any Form-1099s filed after January 19, 2023 are $40 each. 

If you have any questions regarding the service agreements, please contact our Director of Client Services, Ashley Mobley. Her email is ashley@businessbythebook.money. 

If you have questions about Form-1099s or Form-W-9s, please contact your Account Manager. 

Summary of Important Dates: 

• Thursday, September 28, 2023 - W-9 & 1099 Webinar - Register Here

• Monday, October 2, 2023 - Agreements will be sent via Ignition

• Tuesday, October 31, 2023 - Deadline to sign agreement sent via Ignition

• Friday, December 15, 2023 - Deadline to submit Form-W-9s to your Account Manager

• Friday, January 19, 2024 - Final Deadline for on-time filing of your 1099s by BBTB.