1099's are due to be sent to recipients no later than January 31, 2010! There are just 20 days left and counting...
Do you need to prepare and file 1099's?
If you paid more than $600 to any individual, LLC or partnership for rent or services provided to your business during 2009, then you must send that individual a 1099. You must also file all copies of Forms 1099 with the IRS, along with cover sheet, Form 1096 by February 28, 2010.
Examples of Rent/Service Providers...
1. Contract Laborers
2. Subcontractors
3. Marketing Services
4. Accountants/Bookkeepers
5. Attorneys
6. Janitorial Services
7. Consulting Services
8. Landlords
What information do you need from the service provider?
You will need the full name of the individual or business, the address and the individual or business' Taxpayer (Employer) Identification Number, along with the amount that you paid to that provider during 2009.
Do you need help in preparing your Forms 1099?
eeCPA is here to help...
1. We will gather the information from you.
2. We will prepare all of the forms and mail them to the recipients by the deadline.
3. We will file the government forms electronically on your behalf.
4. We will send you copies of all of the forms and a summary report once the filings have been completed.
If you provide us with the information that we need, we will charge you just $25 per 1099.
If we need to gather the information from your accounting files and determine the filing requirements, then we will charge you based upon our standard hourly rates.
Why should you file Forms 1099 timely?
The #1 reason to file your Forms 1099 timely is to preserve the deductibility of your expenses.
For example, I had a client that paid several laborers $3,000-5,000 each. He did not file 1099's to report the payments that he made to these laborers because the laborers did not want to report the earnings. Then, when he was audited several years later, the IRS denied the deductions for several thousands of dollars, limiting the deduction to $600 per laborer. Thus, the taxpayer then was forced to pay the tax on the majority of the expenses that he rightfully incurred to operate his business. Rather than the laborers paying the taxes on their earnings, he was forced to pay the taxes on the monies that he paid out to them, plus penalties and interest.
Secondly, you want to file the 1099's timely to avoid the penalties for late and/or incomplete filings. The penalties range from $15-50 per 1099 Form if not filed, filed late or incorrectly filed.
Tips to make the 1099 process less painless for 2010...
Have all of your service providers complete a Form W-9 prior to making payment to them. That way they have incentive to complete and return the form to you, and you have all of the information that you need when it comes time to prepare your 2010 Forms 1099. You may download a copy of Form W-9 directly from our website...on the forms page.