Tax time seems far off, but it’s not!

The first deadline is to get your 1099s out by January 31^st, but there’s prep work that can be quite time-consuming, so don’t leave it till the last minute!

What is a 1099?

Typically, a 1099 is for a supplier that is not a corporation.  The best practice for designating a 1099 vendor is to have all suppliers fill out and submit a Form W-9, Request for Taxpayer Identification Number and Certification, prior to paying them.  You can then determine whether they should receive a 1099.

Who gets a 1099?

The following is a list of characteristics that determine a supplier as a 1099 vendor (this is a partial list). You are required to use 1099 NEC for compensation paid to non-employees (which used to be Box 7 on the 1099 MISC form). All other types of payments will still remain on the 1099 MISC form.

• Professional service fees -   Examples are accountant, training & development, attorney
• Commissions paid to non-employees
• Fees paid to independent contractors
• Rent payments
• Taxable fringe benefits for non-employees
• Director's fees

My rule of thumb, when in doubt, send the 1099.

Step 1: Compile 1099 Vendor List

Review your vendor list in QB/QBO.   Some may already be designated as 1099 vendors.  Some may not.   If you are not sure and/or don't have complete information for that vendor, you will need to get a W9 Form from them.

This is also a good time to update your vendor list - making vendors inactive speeds up workflow for the following year.

Step 2: Decide who will prepare

If we helped you prepare your 1099s for the 2023 tax year, your lead bookkeeper will be in touch to get the ball rolling again.  If we didn’t help you last year, but you would like our help this year, please contact Michelle by December 30th (michelle@c3workplace.com) to let us know and we will get the process started.  If you are having someone else process your 1099s, touch base with them to make sure you are working within their timeline.

Step 3: Be mindful of the tax timeline

As mentioned, January 31, 2025, is the due date for getting your 1099s out to the recipients, as well as filing copies with the IRS and State.  Avoid the stress of last-minute deadline – get your information in order early and give yourself a generous timeline.

We are here to help…let us know if you would like to talk more about getting ready for tax time!