Just what you need – one more administrative task put on the backs of small business owners.
Starting in 2011, any vendor or independent contractor payment that aggregates to more than $600 in a year gets a Form 1099-MISC.
In the past, we’ve only had to give Form 1099s for services and to unincorporated entities. Now everybody gets a Form 1099, corporations included, and for all payments – services AND goods.
If you buy office supplies at Office Depot, better be prepared to give a Form 1099-MISC to them if the aggregate is over $600 in a year.
Putting This Into Place
If you, like me, reimburse workers for business purchases for my company, I think it will be safer to be prepared to give a Form 1099-MISC to the company if it’s an employee. Or if your worker is an independent contractor, include the reimbursements on the Form 1099-MISC.
Get a W-9 at the beginning of the year for every single person or business you pay. If you’re not sure if the total will aggregate to $600 or more, get the Form W-9 anyway. Hold payment until you get the Form W-9 back. It seems to be much easier to collect them when they’re expecting a check.
If you’re using a program like QuickBooks, then set up the accounts so that you automatically print Form 1099-MISC at the end of the year.
These will need to be done by January 31st of the following year, so also make a note on your calendar to make sure you’ve picked up some blanks. It can be tricky getting hold of forms, and I think that’ll be especially true next year when it dawns on small businesses that they suddenly have a lot more of them to prepare.