Right now our priority is the second round of the PPP (again, please let me know if you’re having any trouble applying or if you have any questions about eligibility), but this is also the final week to file your business 1099s.
In general, a business owner must file and issue this form to any person you have paid at least $600 in rent, services, prizes, awards or any other income payment during the course of the year. Penalties are minimal ($30-$100 per missed form) and typically we don’t have many in this industry, but the fees increase significantly if you intentionally disregard the requirement.
The list of required vendors/sub-contractors does have some exceptions: you don’t have to send a 1099 to S or C-corps, or partnerships that are taxed as S or C-corps, unless they are a lawyer.
Another exception is if you pay these vendors with a credit card or Paypal- they can be excluded because the 3rd party payment processor will be responsible for issuing the 1099.
There may be times that we are not sure if the vendor is eligible for a 1099 so it is always best to request a W9 from individuals/vendors as soon as you start the relationship. The W9 will specify what type of entity the individual/company is and how they are taxed which will allow us to determine whether we should issue and file a 1099, and the simple act of requesting the W9 will show you’re not intentionally disregarding this requirement.