Tax Tips for Small Biz Owners


If you’re a small business owner, you know tax time is no joke. To help, the American Payroll Association offers the following Form 1099-MISC preparation tips to ensure you report everything correctly for 2018.

All Non-Corporate Service Providers Must Receive Form 1099-MISC. Every service provider you paid at least $600 to in 2018 (total payments) is required by the IRS to be provided with a 1099-MISC form. You have until January 31, 2019 to provide this form to contractors. If your service provider is a corporation, Form 1099-MISC isn’t typically required. Owners must also provide Form 1099-MISC to sole proprietorships, partnerships, attorneys or medical service providers who do business as corporations. If you’re unsure whether your service provider is a corporation, request they complete IRS Form W-9, Request for Taxpayer Identification Number and Certification.

Put Your Credit Card to Work. This can be helpful if you paid a contractor with a debit, credit or gift card. If so, Form 1099-MISC is not needed. Instead, the bank or credit card company will do the work for you by sending the contractors Form 1099-K.

Protect Yourself Against Risk. If you’re unsure if Form 1099-MISC is necessary, send one anyway to avoid possible penalties.

Deadlines Matter. You have until January 31, 2019 to send Forms 1099-MISC by mail—with some exceptions. If Box 7 is empty, February 28 is the deadline to file paper copies with the IRS (less than 250 forms) or April 1 to file electronically. If any Forms 1099-MISC reporting nonemployee compensation (NEC) payments in Box 7 will be filed after the January 31 deadline, send them in separate submissions of forms that report NEC payments and forms that do not.

TIN Truncation. Payee’s tax identification numbers (Social Security Number or employer identification number) may be truncated (i.e., masked) on both paper and electronic copies for the payee. The truncation procedure includes the first five digits replaced with either asterisks or Xs: ***-**-1234 or XXX-XX-1234. Forms filed with the IRS must contain the full TINs.

Source: American Payroll Association

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