Happy Wage Statement Day from a Small Business Owner

In honor of the IRS' Wage Statement Deadline today, this small business owner would like to share her experience navigating the 1099.

Before I begin my story, I should start with the fact that I am writing this because I believe in advocating to make things better. I support the IRS and am glad that there was recently a significant investment from Congress to modernize the IRS.

I started my small business 1 1/2 years ago, so this is the first calendar year in which I have multiple wage statements to issue. This is a very good thing for the U.S. government because it means that I am generating revenue (that will be taxed) and generating income for others (that will be taxed).

I have approached small business ownership in a DIY fashion. First and foremost because it reduces expenses and secondly it's been an excellent learning opportunity. One of the biggest and quickest takeaways has been just how hard it is for small businesses to navigate the IRS. As a small business owner, you need to complete many tax forms in addition to paying your own taxes. Today’s focus is the 1099.

For my team members, I am set up through Gusto which is a platform that handles payments and 1099s. This was seamless and kudos to Gusto for making an easy to use and affordable solution.

However, I knew I needed to create a 1099 for my attorney. Yes, that's right, no matter how an attorney's firm is set up, you need to provide a 1099.

Recognizing I needed to create just one 1099, I thought I would try to do this directly on the IRS’ website.

First I read the lengthy instruction form from beginning to end. (Yes, I do read all instructions first when assembling Ikea furniture as well.)

Next, I went to the appropriate form itself and downloaded it from the IRS' website. The cover page was a warning letter, so of course, I read this too. Evidently, the downloadable form is not scannable and you can have to pay a penalty if you use the downloadable form the IRS provides! (Never mind that scanners have been very good for decades now and other IRS downloadable forms are scannable.)

Hmmm...that's not good. I'm now a solid 30 minutes into the endeavor to create a single 1099 and I've hit a snag. Never one to shy away from a challenge, I reviewed my options.

I could order a single scannable paper form from the IRS, but this would cause my 1099 to be late. (It should be noted that these forms are mailed for free and the huge cost the IRS must go to processing these manual requests and mailing them.)

My second option was to submit electronically. Well, this is always my preferred option so I started this process… I tried to follow the link to create an account for my small business. I won’t bore you with the details, but after spending over 45 minutes trying to set myself up in three separate systems, I hit submit and encountered an error message. Fortunately, the error messages had links to the incorrect fields. Unfortunately, the links were broken!?

I tried one last time on the IRS website to submit electronically. While my business name and information is showing up (at least the 45 minutes of effort weren't entirely in vain), it still says I am not authorized to submit electronically.

A fellow small business owner pointed me in the direction of an e-filer who would file the 1099 on my behalf for $2.99. I decided to end my DIY quest with the IRS and use the e-filer. It took me less than two minutes and allowed me to manually add the two pertinent fields (EIN and earnings) that the IRS needs. Yes, all of this for two pieces of information on a single 1099 form!

Many of you will call me crazy for not just going straight to a third party vendor, and in a sense, you’re right. However, the IRS tax codes and forms should not be this difficult to navigate for an individual or a small business owner. Your options shouldn’t be an accountant, third party entity, or hours and hours of your time for a single form. Hopefully, some of the investment dollars in the IRS will go toward downloadable forms that are also scannable and user testing for their website and systems!

Small businesses are an important part of the American economy. We bring innovation, jobs, and yes, tax revenue. We have to ask the government to make things easier for our small business owners. That’s why I’m writing to share my experiences with all of you and will do so with my elected officials as well.