1099s are a form almost everyone’s familiar with but don’t necessarily know everything about.
While most of us may have dealt with a 1099-MISC for gig work or other independent contracting, there’s a slew of other types of there as well. These are one of the more important families of forms that the IRS offers, and one that can help clarify quite a bit for your business tax-wise.
However, for how ubiquitous they are, there’s also a fair amount of complications that come with them too, which the IRS can be quite strict about. That’s why we put together a few reasons why you should consider having an accountant possibly take over the reins of your 1099s this year. Check them out below:
Who do 1099s go to?
1099s are a lump-sum of different transactions you might have to file with the IRS. The most common 1099 is the 1099-MISC, which is generally used for non-employees such as independent contractors. As noted by Balance SMB, some other forms include:
- $10 or more on royalties paid.
- Direct sales of $5,000 or more.
- Payments for rental property expenses.
- Medical-related payments (including physicians, physician corporations, or other suppliers of health and medical services/supplies
- Fish purchases paid in cash for resale.
- Crop insurance proceeds.
- Gross proceeds paid to attorneys.
As you can see, there are a fair amount of routes beyond the 1099-MISC that 10999s can go. Considering we’re just breaking the iceberg on what 1099s are, let’s dive into the types that could potentially apply to your firm.
There are several different types that could apply to your firm.
Although the 1099-MISC is the most common type of 1099 you’ll most likely use, the purpose of the 1099 stretches beyond just what’s above. In fact, the IRS has over 20. To give you a taste, here are the first few NOLO lists out:
- 1099-A, Acquisition or Abandonment of Secured Property
- 1099-B, Proceeds From Broker and Barter Exchange Transactions
- 1099-C, Cancellation of Debt
- 1099-CAP, Changes in Corporate Control and Capital Structure
- 1099-DIV, Dividends and Distributions
- 1099-G, Certain Government Payments
- 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments
- 1099-INT, Interest Income
- 1099-K, Merchant Card and Third-Party Network Payments
- 1099-LTC, Long-Term Care and Accelerated Death Benefits
As you can see, 1099’s cover a whole swath of issues, which is why it’s best to consult with a tax expert on which routes you might need to include in your mix.
The deadlines are different.
The deadlines for 1099s are usually January 31st. Extensions are available through Form 8809, which can help if you still need to round up and rectify what’s happening with your contractors.
From the size of your font to the color of ink used, the IRS can hit you with an error on any number of things, ultimately leaving you liable to late fees.
The fees can be hefty.
If you don’t ask for an extension or file, then the fees you could be hit with are quite a pretty penny. Currently, the fees can range from $50 to $270 per form, which a maximum of $1,113 per small business. Even if your small business can eat the cost, it’s probably not worth the headache of going back and forth. Instead, hire an expert to get it done, getting a better return on that dollar every time.
There’s little wiggle room for error.
Even if you do get everything in on time, there’s still the risk of filing an error. From the size of your font to the color of ink used, the IRS can hit you with an error on any number of things, ultimately leaving you liable to late fees. Even if you do file on your own, make sure that you’ve dotted your T’s and crossed your I’s, as it’s a painstaking process to go back and forth over such minute details.
Organizing and filing the proper 1099 forms can be quite a lot to put together, which is why we’re here to help. No matter what your business had to deal with this year, we have the knowledge on how to organize and consolidate your 1099s to be shipped into a simple and efficient delivery you can digest. Don’t hesitate to reach out for a free consultation on how here.
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