Whether you are a freelancer or a small business employee whose business is contracting outside help, you must have heard about the IRS 1099 form. But what is this form, and how do you create it? 1099 Forms are information filing forms that are used for tax purposes to report income other than salaries. There are different types of 1099 forms; the most popular one is the 1099-MISC. Earnings such as prizes, selling personal properties, tax dividends or other means of income should be reported to the IRS on 1099 forms. If you are a small business owner, then the 1099-MISC form is the one you will most likely be dealing with. To understand how to create this form, we have created a mini-guide to help you with this task.
Collect Information First
Before you start with the process of creating a 1099 form, you need to have all the needed information on your contractors and vendors at hand first. Filling a W-9 form for every vendor is essential before proceeding with 1099 forms. This form has to have their names, addresses, and social security numbers. It’s important to check with the contractors about their information in case of any changes before you fill in the forms.
Get The 1099 Form
Instead of tiring yourself with trying to find the specific forms that are readable by the IRS scanner, you can search for alternative sources to do everything electronically. Nowadays, you don’t have to have your head spinning with complicated regulations and old rules. You can just create a 1099 online easily with the pros to avoid common mistakes. You can find a special team that will answer all your inquiries, questions, and assist you in doing your calculation to make sure that your form is 100% correct.
Fill Out And Send The Form
With the information you made sure of its accuracy and the assistance of the pros, you can start filling out the form. It’s recommended to fill in your Federal Tax Number (whether it’s your Social Security Number or your Employer Identification Number) first. Then you can add the contractors’ SSN OR EIN. The box that says “Non-Employee Compensation” should be filled with the amount of money you paid to the contractors. After filling all the boxes, you need to confirm that their taxpayer ID is correct. After that, you can proceed with sending out the forms, whether you have chosen to hand them to the contractors or to mail them. Don’t forget to meet the deadline that is usually by the end of January to avoid penalty fees.
1099 forms are a must for any freelancer, vendor, or contractor that you hired and paid more than $600 for their work. Most small businesses need a specific type of 1099 form which is called 1099-MISC forms. They can be easily created after you collect all the needed information, fill in the information, and file them whether they are paper filed or electronically. Seeking professional help is always better to avoid troubles and mistakes.