Author Archives: Kitty Barbee

1. 1099s: What You Need To Know

   2023… is officially here, and with it comes tax season.  For small business owners, preparing and sending 1099s is an annual tax season activity.

   • Do you need to send 1099s?
   • Who do you send them to and when do you send them?
   • Which 1099 do you send?

   Who Receives It

   An IRS 1099 form, referred to as an “Informational Return”, reports monies received that is not reported from an employer on a W-2 form.  Examples include independent contractor income or stock dividends.

   Several variations of the 1099 form exist for a variety of circumstances, but the two most common forms are the 1099-NEC and the 1099-MISC.

   Form 1099-NEC

   If your business pays more than $600 to a vendor or independent contractor, you must send Form 1099-NEC to document what it paid the Individual, Partnership, Limited Liability Company, Limited Partnership, or estate throughout the year. Basically, anyone who worked for the company — other than its payrolled employees and owners — will need a 1099-NEC from your business.

   Examples of people to whom you may have to send a 1099-NEC include:

   • Freelance creatives (writers, graphic designers, photographers, etc.)
   • Professional service providers (consultants, lawyers, accountants, tax advisors, etc.)
   • Vendors operating as sole proprietors (caterers, computer repair technicians, business remodeling contractors, etc.)

    

   Form 1099-MISC

   Prior to 2020, businesses issued IRS Form 1099-MISC to each vendor or independent contractor they paid $600 or more in services, prizes and awards, rents, or other income payments.  That changed in 2020.  Now the 1099-MISC is used for documenting items such as the following:

   $10 or more paid for:

   • Royalties
   • Broker payments instead of tax-exempt interest or dividends

   $600 or more paid for:

   • Fishing boat proceeds
   • Crop insurance proceeds
   • Rents
   • Prizes and awards
   • Medical and healthcare payments
   • Attorney services (not fees)

    

   Exceptions

   There are exceptions to who receives the 1099-NEC or 1099-MISC form.  These types of vendors do not get 1099-MISC or 1099-NEC forms:

   • Those businesses with S Corporation or C Corporation entity structures
   • Limited Liability Companies (LLCs) that are taxed as C Corporations or S Corporations
   • Companies that sell merchandise, storage, freight, or other similar things

    

   Deadlines
   For the 2022 tax year the deadlines are as follows:

   1099-NEC

   File to recipients by Jan. 31, 2023
   File to IRS by Jan. 31, 2023

   1099-MISC
   File to recipients by Jan. 31, 2023
   File to IRS by Feb. 28, 2023

   Paper Copies

   If sending paper copies of 1099 forms by mail to the IRS, your business must also submit Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) with the filing.

   It’s also important to review the state’s tax filing rules, as some states require copies of a business’s 1099s.

   Software Can Help

   Business owners can request 1099-MISC and 1099-NEC forms via the IRS website to receive them by mail. But there are several software solutions out there that can file electronically for you, including copies to the vendors.  A few programs include:

   • Track 1099
   • W2 Mate
   • CheckMark 1099

   Be Prepared
   To help prepare for 1099 season be sure and obtain a completed W-9 from all your vendors when you first engage with them.  The W-9 provides the necessary information needed to report on the 1099.  It contains the vendor’s mailing information, Tax ID number, and business structure.

   Penalties

   Sending the required 1099-MISC or 1099-NEC forms late (or not at all) can cost you.  The penalties currently vary from $50 to $290 in 2023, depending on how far past the deadline the filing is. If a business gets caught intentionally not providing a payee with a correct statement for the tax year, the “intentional disregard” penalty is $580.

   Understanding the who, what and when of 1099s is important for you as a small business owner. Make sure you are keeping up on the forms, requirements, and the deadlines.   Start 2023 with a calendar of due dates for your small business to help stay on track.  Still have questions? Reach out to Barbee Business Services, sign up for our newsletters or request a consultation. 

2. QuickBooks Essentials+

   • Is QuickBooks Online still baffling you?
   • Are you struggling to keep up with the day-to-day transactions?
   • Are credit card and loan balances incorrect?
   • Can you run financial reports for your bankers/investors?
   • Are you ready for tax season?

   If you are struggling with any of these issues, then sign up for our QuickBooks Essentials+ Course.

   QuickBooks is one of the best-known and most widely used accounting software programs on the market, in part due to its vast capacity for handling income and expenses, invoicing and payments, tax deductions, financial reporting and more.  It’s meant for businesses of all sizes: for that small business owners who don’t have accounting staff and for businesses who do – even self-employed people.

   But to fully utilize QuickBooks and to make it the financial tool for your business, you need to understand the platform, learn the workflows, customize it for your business and know how to find and fix common errors.

   QuickBooks + Training = A Better Set of Books for Your Business

   This class is meant for small business owners who want the flexibility of an easy-to-use software that helps them manage a profitable business.  Whether you or one of your team members are in charge of the day-to-day transactions, you’ll want to take this course to fully employ QuickBooks Online.