The beginning of each year marks the start of tax season. As a small business owner, you are responsible for 1099 and W2 preparation and reporting to the IRS. Plus, you’re responsible for sending these crucial documents to your employees and subcontractors.
1099 and W2 Preparation Done For You
Because we know tax season can quickly become overwhelming, we offer our clients 1099 and W2 preparation. We love to go beyond your expectations for what a CPA firm “normally” does. We want to help make sure your IRS documents are compliant and into the IRS database by the due date. The due date for your documents to go out to employees, subcontractors and the IRS is January 31, 2020.
What’s the deal?
For our 1099 and W2 preparation service, Paragon will:
- We must have information about your W2 employees and 1099 subcontractors by January 24, 2020. Sorry, there’s no exception on this due date.
- Never send payment to anyone before you receive a completed W9 tax form. You’ll need this form to determine if you need to send them
- All lawyers and businesses that are an LLC (not filing as a corporation) are required to receive
a 1099. Hence why you need that vital W9 tax form.
- We will complete the necessary documents & send them to your vendors & IRS electronically.
1099 Preparation Information
- Forms 1099: must be mailed to recipients by January 31, 2020.
- 1099-INT: In the course of business if you paid $600 of interest to an individual or partnership, you should issue a 1099-INT.
- 1099-MISC: You should file a 1099-MISC if you paid $600 or more during the tax year in the course of your trade or business (NOT a personal expense) to an individual or partnership. Professional fees to an attorney, doctor or other professional are included. Payments to corporations are included only if they are for medical, health care, legal or fishing activities. LLCs and LLPs are not corporations and should receive a 1099.
Payment types requiring a 1099-MISC (this list is not all-inclusive):
- Compensation for services rendered by a nonemployee to your trade or business, including anything you paid the contractor for supplies and materials
- Rent for office space, machines, equipment or land (do not include amounts paid to corporations or real estate agents)
- Prizes or awards to an individual who is not your employee (unless the prize was transferred directly to charity)
- Medical or health care payments to an individual, partnership or corporation
- To an attorney or corporation for any legal services
- Taxable fringe benefits to nonemployees in the course of your trade or business
- Punitive damages
- Director’s fees
- To a deceased employee’s estate or beneficiary
- For royalties of $10 or more
As you can see, the 1099 rules are fairly cumbersome and confusing. Our rule of thumb is to FILE IF THERE IS ANY DOUBT.
If you would like for Paragon Accounting & Tax Solutions, LLC to prepare your 1099s:
- For each 1099 recipient we would need a W-9, the amount paid to them during the year, and the payment “type.” (See above)
- For us to have the 1099s completed by January 31, 2020, we would need to receive all the information by Friday, January 24, 2020.
We love our small business customers. We know the tax code and we know how to keep your tax documents compliant with the IRS. Complete the form below or call us 770.928.7229.