Okay, but who get a 1099-MISC form?

Accountant for Contractor

Sending out your 1099-MISC forms is an important part of being a small business owner.  It’s against the law to not report your 1099-MISC payments to the IRS but how do you know who gets one and who doesn’t?  Let’s break it down.

  1. Did you pay them more than $600 this year?

This is the first good rule of thumb when it comes to the 1099-MISC.  If you paid anyone for a service who is not an employee on your direct payroll more than $600, you must send them over this form.  Some people who might fall into this category include (but are not limited to) cleaning services or IT support.  This article by The Balance called Who Must Receive Form 1099-MISC goes a bit more in-depth and is a great read if you have more questions.

Bookkeeping and Accounting 1099 filing

  1. This is a Business Expense

You do not need to send a 1099-MISC form to someone who performs a service to you personally.  You could even use the same contractor in two situations in the same tax year and you’ll only need to send them a 1099 for what they did that impacted your business directly.

  1. The Business you Contract with is an LLC Sole Proprietorship

So, you get a W-9 from a worker that you’re contracting.  Their W-9 shows that they are a sole proprietorship LLC.  This means you send them a 1099-MISC form!  If their W-9 indicates that they are an S- or C- Corp refer below.

Bookkeeping for LLC

  1. The Business You Contract with is a C-Corp or S-Corp

This little rule is broken down really well by efile4biz.com!  They say that:

“It’s a common belief that businesses don’t need to send out 1099-MISC forms to corporations. And this is true. Sometimes.

In general, you don’t have to issue 1099-MISC forms to C Corporations and S Corporations. But there are some exceptions, including:

  • Medical and health care payments
  • Payments to an attorney
  • Substitute payments in lieu of dividends or tax-exempt interest

You can read about other exceptions, such as cash payments for fish (yes, it’s a thing) here.”

1099-Misc Rules

We hope that clears things up for you and remember: you’re always better off safe than sorry.  If you can’t decide whether to file a 1099-MISC form you are better off filing and not having needed to than being penalized later.

Deadlines to file are fast approaching!  Deadline to file is January 31, 2018.

Let Us Help

We like to take the pain of filing a 1099-MISC off the hands of our clients and offer the service starting at a $299 filing fee with an $8 charge for each 1099-MISC filed.  Feel free to give us a call at 800-757-0510 or email ask@accountixsolutions.com if you would like to talk about partnering with Accountix on your business’ 1099-MISC forms!