-- Is My Business Required to File a Form 1099 or Other Information Return? --

?It's time for businesses of all types (including those who are self-employed) to file 1099s and other information returns with the IRS with copies to various vendors, contractors and customers.

??If you use contractors, buy goods or services, pay rent or interest, or a long list of other circumstances, your business may be required to file an information return with the IRS and provide a copy to the recipient.

?Information returns continue to be one of the most misunderstood tax reporting requirements by many small businesses. However, it is important to understand your compliance requirements, as the fines and penalties for failing to file complete and accurate forms are very large.

?Last year saw a new form - 1099-NEC which is specifically designed for non-employee (contractor) payments. These used to go on form 1099-MISC box 7.

?Special deadlines apply to the new 1099-NEC. These are due to the IRS and the recipient by January 31st. Deadlines for filing other information returns with the IRS and recipient copies vary by form - check with the IRS for your specific form as to when it is due.

?There is also another change to the form 1099-MISC. Box 7 now requires any firm selling $5,000 or more of consumer products to a buyer for resale to check a box. See instructions for reporting requirements.

?An excellent summary of who must file the main types of forms is available on the IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/a-guide-to-information-returns -- However, this is just a summary and numerous exceptions apply.

??For example, although 1099-MISC generally are not required if the payment was made to a CORPORATION (S-corp, C-Corp or LLC taxed as a corp), payments to attorneys and healthcare payments must be reported regardless of the legal structure. Also remember that just because a vendor uses a business name (like Joe's Office Supplies or Southern Landscaping) that does not automatically exempt them. All businesses should get a form W-9 completed and signed by all vendors, contractors and customers. These provide the information you need to determine whether or not information reporting is required.

?Information reporting is very complex and every business is urged to consult with a qualified business tax professional to determine the specific requirements for their business. Do not rely on any information on the web or social media sites. Much is wrong, incomplete, out dated or easily misunderstood. For example, this post is just for general information and not the final word for any specific business. It will also be here a year or more from now and may not be current.

?It is much easier (and less expensive) for your business to do this right the first time than to try to fix errors later, possibly incurring very large penalties, as well as upsetting your contractors and customers.

??For professional business tax assistance and business growth tips, see https://yoursmallbusinesscpa.com - Kulzick Consulting, PA -- Growth & Profitability Consulting, Accounting, Tax

?This article is for general information only and does not constitute tax advice - for tax advice for your specific situation, contact a qualified tax professional.

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