Manpower is an essential resource for any business. Without effective manpower, a company can’t operate effectively. There are 2 types of categories that individuals can be classified when we associate them with a company. First, there are employees of the company who work for a fixed annual package, have certain rules and regulations to follow, work hours fixed for them and etc. On the other hand, there are people who are working for the company but not as employees, but as people hired by the firms on contract basis. In short, individuals hired on contract basis are self employed and work for the company for a certain time period and are not bound by any rules and work on their own flexible timing. Example could be – advocators, artists, designers, writers or any other freelancers.
When a business hires the services of independent contractors, they also have to track the payments given to them in order to report the payments on 1099 misc form.
Now, let’s discuss some essential pointers that you should keep in mind before filing 1099 misc forms:
1099 misc form is required for self employed and independent contractors
If you hired services of an independent contractor and paid them for their services $600 and more during the year 2011, then it is mandatory that you provide them 1099 misc form by the due date which is January 31st 2012.
Form 1099 misc is to be provided to individuals who are self employed and not to individuals who are registered as a corporation. The only way to know if a service provider is a corporation is to have them complete IRS Form W-9, Request for Taxpayer Identification Number and Certification.
Form 1099 misc is not required if businesses pay electronically
If you paid your contractors not by cash but through electronic payment method, say credit card, pay pal, gift card, etc, in that case, there is no need for you to file a 1099 misc form. The bank or credit card company that made the payment on your behalf will send the contractor Form1099-K.
TIN truncation pilot program extended through 2012.
The IRS is extending the Taxpayer Identification Number (TIN) truncation pilot program through 2012 for 1099s that are filed in 2012 and 2013. Payees’ TINs may be truncated on their paper copies but forms filed with the IRS must contain their full TINs. Under the truncation procedure, the first five digits are replaced with either asterisks or Xs: ***-**-1234 or XXX-XX-1234.
Unsure about issuing 1099 misc form.
If you are not sure if you are required to send 1099 misc form to your contractors, no worries go ahead and send one. There is no harm in sending extra 1099 forms. But if you are required to send 1099 misc forms and do not do so, then no one can save you from incurring penalties.
Send 1099 forms by the due date
Besides sending 1099misc forms to your contractors, you also have to file a copy with the IRS. If you plan to mail the 1099 copies then make sure you do so by Feb 28th. If you want to efile 1099 misc, then the due date is April 2nd 2012.
Now, as we said earlier, it can turn out to be a nightmare if you have to file hundreds of 1099 misc forms. Hence, to safeguard your pocket and your time, the best option would be to electronically file 1099 forms. Preferably you can select a service provider who will do your 1099 form filing. However, before selecting or zeroing on a service provider, it is essential that you understand certain requisites.
When a business hires the services of independent contractors, they also have to track the payments given to them in order to report the payments on 1099 misc form.
Now, if there are hundreds of independent contractors hired, it can certainly turn out to be a nightmare, if you have to individually file each 1099 form and mail it to the recipient. Imagine how much cost you will incur and the amount of time wasted. Now, there is a way out for that which I will come back to later.
Now, let’s discuss some essential pointers that you should keep in mind before filing 1099 misc forms:
1099 misc form is required for self employed and independent contractors
If you hired services of an independent contractor and paid them for their services $600 and more during the year 2011, then it is mandatory that you provide them 1099 misc form by the due date which is January 31st 2012.
Form 1099 misc is to be provided to individuals who are self employed and not to individuals who are registered as a corporation. The only way to know if a service provider is a corporation is to have them complete IRS Form W-9, Request for Taxpayer Identification Number and Certification.
Form 1099 misc is not required if businesses pay electronically
If you paid your contractors not by cash but through electronic payment method, say credit card, pay pal, gift card, etc, in that case, there is no need for you to file a 1099 misc form. The bank or credit card company that made the payment on your behalf will send the contractor Form1099-K.
TIN truncation pilot program extended through 2012.
The IRS is extending the Taxpayer Identification Number (TIN) truncation pilot program through 2012 for 1099s that are filed in 2012 and 2013. Payees’ TINs may be truncated on their paper copies but forms filed with the IRS must contain their full TINs. Under the truncation procedure, the first five digits are replaced with either asterisks or Xs: ***-**-1234 or XXX-XX-1234.
Unsure about issuing 1099 misc form.
If you are not sure if you are required to send 1099 misc form to your contractors, no worries go ahead and send one. There is no harm in sending extra 1099 forms. But if you are required to send 1099 misc forms and do not do so, then no one can save you from incurring penalties.
Send 1099 forms by the due date
Besides sending 1099misc forms to your contractors, you also have to file a copy with the IRS. If you plan to mail the 1099 copies then make sure you do so by Feb 28th. If you want to efile 1099 misc, then the due date is April 2nd 2012.
Now, as we said earlier, it can turn out to be a nightmare if you have to file hundreds of 1099 misc forms. Hence, to safeguard your pocket and your time, the best option would be to electronically file 1099 forms. Preferably you can select a service provider who will do your 1099 form filing. However, before selecting or zeroing on a service provider, it is essential that you understand certain requisites.
- The efile service provider should be IRS authorized and approved
- Efile service provider should have customer support service via email, phone and live chat.
- Efile service provider should provide secure portal for efiling 1099 forms
- Efile service provider should be cost effective
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