1099-MISC (Miscellaneous Income) forms need to be issued by your business yearly when you pay independent contractors $600 or more for services.
You can purchase the forms cheaply at Staples. Make sure to purchase 1099-MISC forms and the right envelopes. I was in a rush the other day and picked up 1099-INT forms. To complete the forms, you need a list of all the independent contractors, their current address, and social security number. If you are using Quickbooks, you can run a 1099 vendor report to get a list of the total amount paid to vendors. If you don’t use Quickbooks or another accounting system, then just review your check register and add up all payments made to each independent contractors.
The deadline for issuing 1099 forms is in two weeks on January 31, so get the forms now!
On the flip side, if you are an independent contractor or freelancer, then follow up with clients to receive the 1099 forms by January 31st to that you can file your own tax returns. Review the amount in Box 7 of the 1099 form to make sure that it agrees with the payments you actually received in 2007. This is important since these payments are part of your taxable income.