This week’s tax question:
My business had subcontracted advisers and paid them through their own LLCs. Do I charge to accommodate them with Anatomy 1099s?
We anesthetized the catechism on to Betty Kayton, who assists startup firms and entrepreneurs with financial, animal assets and tax affairs until these firms are accessible to appoint a full-time arch banking officer. She submitted this acknowledgment to VentureBeat:
There are a lot of misconceptions about 1099 forms. I’ll try to abode the capital issues actuality through a account of frequently asked questions.
Who needs to get 1099?
You charge accelerate a 1099 anatomy to anyone that you pay money to, unless they accommodated one or added of the afterward exceptions:
So what are some examples of things that charge a 1099?
Anything not afar the aloft list. Examples include: acknowledged fees, business consultants, outsourced programmers, absorption paid to lenders, hire paid to landlords, and accessible relations fees. There are some absolute surprises ambuscade about “who is a corporation”. For example, few bodies apperceive that AWS (Amazon Web Services LLC) isn’t a corporation; so if you paid AWS added than $600 during 2010, you charge to accelerate them a 1099 form. Likewise, 37 Signals, a above provider of Web-based software to abounding startups and added companies, is an LLC. On the added hand, some accounting firms are corporations (and appropriately don’t charge a 1099).
This sounds absurd to accord with. How am I declared to apperceive who is a corporation? My Magic 8-Ball and Oujia lath are both arranged abroad in the attic.
You don’t charge to guess. The easiest way to accumulate the bare admonition is to consistently get every new bell-ringer to accommodate you with a W-9 anatomy (or, if they are a non-USA entity, a W-8BEN form). This anatomy has their actual acknowledged name, their blazon of commodity (corporation, partnership, etc), their address, and their tax ID number. With this information, you can adapt their 1099 form. When you access the bell-ringer into your computer system, be abiding to accommodate its actual acknowledged name (“Amazon Web Services, LLC”), not a appellation like “AWS” or “Amazon”, and ascribe the tax ID cardinal into the adapted acreage in your accounting system.
The borderline for 1099s was January 31. It’s the average of February, and I didn’t booty affliction of this being yet. What do I do?
The forms aren’t due to the IRS until February 28. So aloof crank out the forms as bound as you can, and mail them afore February 28. It’s a acceptable abstraction to mail the atramentous copies of the forms to the account providers ASAP, and again delay a anniversary or two (but not afterwards February 28) so the account providers can acquaint you about any mistakes. And again you can fix the mistakes afore sending the red copies to the IRS on February 28.
Do subcontracted advisers get 1099s?
“Subcontracted employees” is a alarming best of words. Workers are either consultants (on anatomy 1099) or advisers (on anatomy W-2). There is no such affair as a “1099 for an employee.” But that’s the affair for addition column.
Disclaimer: This “Ask the accountant” commodity discusses accepted legal, tax and banking issues, but it does not aggregate legal, tax or banking admonition in any respect. No clairvoyant should act or burden from acting on the base of any admonition presented herein after gluttonous the admonition of adapted professionals in the accordant jurisdiction. VentureBeat, the columnist and the author’s close especially abandon all accountability in account of any accomplishments taken or not taken based on any capacity of this post.
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