No matter what type of business you operate, January is busy. You’re trying to get your business off to a good start in the new year, you’re closing the books on last year, and you have to complete payroll and 1099 forms by month-end. Why not make time this month to get a head start on at least one of those chores?
You can lay the groundwork now for a common information return known as “Form 1099-MISC, Miscellaneous Income.” You use Form 1099-MISC to report payments to non-employees. The list of payments includes fees to independent contractors for services, such as consulting, web designing, accounting, and legal. Generally, you don’t need to report amounts you pay to corporations, but there are exceptions. For example, you must report payments to all law firms, whether the firm is incorporated or not.
Here’s the information you need to start assembling to complete Form 1099-MISC: the name and address of vendors you paid in the course of your business, the taxpayer identification number of each vendor, and verification of corporate status. The best way to collect this information is to use “Form W-9, Request for Taxpayer Identification Number (TIN) and Certification.” Send a copy to all vendors and ask them to complete and return the form to you. When you get the form back, keep it with your records. The IRS doesn’t need a copy.
In order to save time in the future, establish a policy to request Form W-9 from a new vendor whenever you sign a contract.
Contact our office at 646-688-2807 if you need more information.