The following is provided for your information and to help you determine if you need to file 1099s this year.
We are pleased to file them for you. You will receive a 1099 agreement from us by mid-November. Please electronically sign it if you would like to take advantage of this service.
Best Practices for Managing 1099s:
- Know when a 1099 is needed
- Gather the information required
- Ensure accuracy of information
- File on time
- Confirm details every year
When is a 1099 needed?
Here is the IRS publication: https://www.irs.gov/pub/irs-
File Form 1099-MISC or Form 1099-NEC for each person to whom you have paid during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest (1099-MISC)
- At least $600 in:
- Services performed by someone who is not your employee (including parts and materials) (1099-NEC)
- Rents (1099-MISC)
- Gross proceeds paid to an attorney (1099-MISC) or payments to an attorney (1099-NEC)
The full list is posted in the IRS publication link, but above are the more common payments that would require a Form 1099-MISC or Form 1099-NEC.
In addition, use these forms to report that you made direct sales of at least $5,000 of consumer products to a person on a buy-sell, a deposit-commission, or other commission basis for resale.
By far the most common use for a 1099 is to record payments made for services performed by someone who is not your employee.
The guidelines say “person”, but 1099s must be filed for individuals, partnerships or LLCs. Corporations do not receive 1099s, with one exception: any attorney who receives payments over $600 in a single year should receive a 1099, no matter the business entity.
The best way to know whether a 1099 will be required is to ask the company to supply a W-9 when the business relationship begins.
The IRS published an updated W-9 form as of March 2024. It is recommended that you request updated W-9s to ensure your vendor has the correct tax classification listed. Here is a link to more information regarding W-9s:
https://www.irs.gov/pub/irs-
Gather Required Information for 1099s
When you select a new vendor that may be issued a 1099, require a W-9 from them at the time they submit their first invoice.
Make it a requirement to have the W-9 on hand before you approve payment of the invoice and confirm that it contains the Tax ID for the vendor as well as the tax classification (Box 3a). If a vendor fails to provide a W-9 with the correct tax identification number (TIN), you should withhold at a rate of 24% from any payments made.
Require an electronically typed W-9 so there is no chance of misreading critical information. Ideally you should request this information through QuickBooks Online when you set up the vendor.
Keep the W-9 in your vendor files. It should not be sent to the IRS.
Also, obtain an email address. Although not necessary, this contact information is important when filing.
Ensure Accuracy of Information
These items are critical for ensuring 1099s are filed correctly:
Payments made via electronic means (PayPal, Venmo, Ebay, debit/credit card, etc.) must be recorded that way. These payments should not be included in the 1099 to the vendor as they are filed differently by the payment processing company. Note: Zelle payments should be included in the 1099 totals.
Run 1099 reports from QuickBooks mid-year, in September and in November, to be sure you have everything you need to meet the filing deadline in January.
File on Time
The deadline to file with the IRS and to provide 1099s to vendors is January 31st each year. Penalties for 1099 reporting errors can be costly. Incorrect information, typographical errors and late filings are the most common causes for penalties.
Confirm Details Every Year
At the beginning of each new year, review your list of “regular” 1099 vendors and request an updated W-9 for the current year. Also confirm the current email address.
Please contact your Blazej Accountant if you have questions.
Every client story teaches us something.
Over the years, we’ve had the privilege of walking alongside business owners at different stages, some growing fast, some rebuilding, some simply trying to get clarity.
Each one taught us lessons that now guide how we serve every client who comes through our door.
Here are three client stories that shaped how we work, what we value, and the principles we apply to every client at Blazej Accounting.
I hope you enjoy reading this month’s Road to 20!
Cheryl Blazej
Have a question or need a referral to another professional?
Contact Cheryl at cheryl.blazej@