Happy New Year--- January is 1099 time!

Here is a very brief step-by-step about 1099s.

Disclaimer— this post is educational in purpose. Rules change over time and vary by industry and location, and this cannot be taken as tax advice. Please check with your tax preparer about your specific situation.

When someone performs a service for your business (repairs, cleaning, bookkeeping, web design, social media, lawyer, accountant, business coach, consultants, window washer, and even your landlord - in some cases) and you pay them $600 or more in the year, you need to issue them and the IRS a 1099-MISC.

Step 1: Get the service-provider to fill out a W9. This tells you whether they really need a 1099-MISC (corporations or LLCs taxed as a corporation don’t - many landlords fall under this). This also gives you their SSN/EIN and contact info.

Note: if you pay rent to a property manager or real estate agent, not the actual landlord, you don’t send them a 1099. Even if your attorney is a corporation, you do send them a 1099.

Step 2: Did you pay the service-provider via bank transfer, ACH, check, cash, Venmo? If so, and they are not taxed as a corporation, you need to issue them a 1099-MISC. If you paid via credit card, PayPal, or debit card, the third party processor will issue the service-provider a 1099-K instead.

Step 3: Now is crunch time. It’s January and you need to figure out how much you paid each person. (Note your bookkeeper can help with that!)

Step 4: Send out the 1099-MISC either by mail or electronically by JANUARY 31st!! There are many programs that help simplify this, or your bookkeeper or CPA can do it for you.

If you need help, ask for it!

Here is a great blog from Gusto that goes into more detail on 1099.

Here are the actual instructions from the IRS.