It is no surprise that tax season is upon us, nor is it a surprise that many businesses wait until the final moment to start gathering information they should have been working on throughout the year.
Vendors who receive at least $600 during the year must be issued an IRS Form 1099. In order to issue the 1099, you need some basic information including the vendor´s tax identification number.
In order to obtain the tax identification number, you need to provide the vendor with an IRS Form W-9. It would be greatly beneficial to obtain this form PRIOR to paying the vendor"?¦this way you will be assured of receiving the necessary information needed prior to issuing 1099´s. You may obtain information on W-9´s by visiting http://www.irs.gov/pub/irs-pdf/fw9.pdf.
February 28th is the due date for issuing 1099´s. The following is very basic information on issuing 1099´s. 1099´s will be issued to each person to whom you have paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest; at least $600 in rents, services including parts and materials, prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish or other aquatic life; any fishing boat proceeds; or gross proceeds to an attorney. For in-depth information, visit http://www.irs.gov/pub/irs-pdf/i1099msc.pdf.
If you have not obtained W-9´s, do this immediately. Copy the form, fill out the employer information and make as many copies as needed. Sign each copy and send to all of your vendors. Vendors who are incorporated do not receive 1099´s; however, I do recommend having the vendor information on file.
Your vendors may fax this information back to you, which would be preferable this late in the month. Simply attach a letter to the front of the W9 form and ask that vendors fax this information back to you as soon as possible.
Make a fresh start this year and send these forms before paying your vendors. This will save you a lot of headaches at the beginning of next year. Should you have any questions regarding this information, please feel free to email me and I will get back with you promptly.
"The hardest thing in the world to understand is the income tax." ~ Albert Einstein