| An important deadline is looming for small business | | | | need to make the decision as to whether you need to |
| owners who use subcontractors to work in their | | | | prepare a 1099, the subcontractor's address, and the |
| businesses. January 31st is the deadline for the filing of | | | | subcontractor's Social Security Number or Employer ID |
| IRS form 1099-Misc for all unincorporated | | | | Number. Get this information before you cut any |
| subcontractors who were paid $600 or more and all | | | | checks to the subcontractor. |
| fees paid to lawyers during the past year. | | | | 2. The IRS wants to know about any of your |
| This is often a time of scrambling for small business | | | | unincorporated subcontractors who you pay more |
| owners as they try to figure out a) who they need to | | | | than $600 to in the course of a year. The intent is to |
| do 1099's for and b) what the Social Security Number | | | | keep tabs on self employed subs who may be trying |
| or Employer ID number is for each contractor. | | | | to hide income from the IRS. Failure to file these forms |
| Often, a small business owner will hire a subcontractor | | | | puts the business owner at risk for fines and penalties |
| to get the job done without thinking ahead to that day | | | | for failure to file or filing late. By being proactive in |
| of reckoning in January where they need to provide | | | | getting your subs information ahead of time, you avoid |
| the subcontractor and the IRS with pertinent | | | | the risk of missing the deadline or not including subs |
| information. | | | | who should be getting forms. |
| This lack of planning causes many business owners to | | | | 3. If you find yourself in a situation where you have no |
| begin singing the 1099 blues as they try to collect the | | | | idea who is incorporated or not or who should get |
| necessary information before the deadline. In some | | | | forms or not, send W-9's to all your vendors and give |
| industries, subcontractors suddenly disappear when | | | | them a deadline for returning the form to you. Don't |
| they hear the phrase "1099". They try to avoid getting | | | | wait until the last minute to do this because you won't |
| a 1099 detailing their income, preferring to take the "fly | | | | get your forms back in time to meet the Jan. 31st filing |
| by night" express. | | | | deadline. |
| So, how do you avoid singing those down and dirty, | | | | 4. If you need help preparing the forms contact your |
| IRS cursing, disappearing subcontractor blues? | | | | CPA or a local accounting service to give you a hand. |
| 1. When you start to work with a subcontractor (or | | | | Remember though, their existing clients may already |
| any new vendor for that matter), have them fill out a | | | | have dibs on their time so don't wait until Jan. 31st to |
| form W-9. Form W-9 captures all the information you | | | | ask for help. |