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1099 Forms: An Important Part Of Year-End Closing

If your company uses freelancers or independent contractors, then it is your obligation to complete a 1099 form, send a copy to the IRS, and a copy to the service provider who was paid.

Independent contractors are workers who are not on a company’s payroll and, unlike regular employees, don’t have taxes taken out of their paychecks.

Instead, independent contractors file their self-employment taxes on a 1099 form.

In 2016, Upwork reported there were 55 million freelance workers in the United States. That’s a lot of 1099 forms!

Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. will happily take the weight of 1099s off your shoulders by doing them for you.

We’ll complete the forms, send them to the appropriate contractors, and maintain audit-ready records of them.

There are 15 types of 1099 forms, which the IRS calls “information returns.”

The different 1099 forms report various types of income received throughout the year other than salaries paid by an employer.

The paying entity is responsible for filling out the appropriate 1099 tax form for every payee their company has paid $600 or more to in the prior year.

Most organizations use a Form 1099-MISC, which requires the contractor’s name, address, social security number, the type of work they did for the company, and the net amount paid that year.

It communicates to the IRS how much service providers were paid over the year so they can match the vendors’ income reports to the totals reported by paying companies (like yours).

The deadline for submitting most 1099 forms is January 31st.

This gives freelancers enough time to receive and include the copies with their own tax returns.

The IRS often revisits and revises 1099 rules and deadlines.

It is essential that your e-file provider is following the most recent IRS submitting rules to prevent penalties and late notices from the IRS.

Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. stays on top of the changes so you don’t have to.

For example, beginning in January 2019, the IRS will require that a 1099-MISC form with Box 7 filled-in must be filed separately from a 1099-MISC form with any other box filled-in (for example, Box 1).

If you’d like One Source Services, Inc. to handle 1099s for you, then contact us as soon as possible so that we can collect the necessary information from you by January 15th to make the January 31st IRS deadline.

Our mission is to simplify your finances and give you more financial peace of mind.

Hit us up for other ways that we can simplify year-end closing!

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