Business Reporting for 1099s
What is a 1099 form?
The IRS uses a 1099 form to report various types of income other than wages.
The form reports any income over $600 paid to contractors (non-employees), lawyers, single proprietorships, landlords, royalties received, partnerships, and much more. The only non-employee paid out that is not reports using 1099 are corporations.
Whenever a company is paying someone new that is not an employee, they should receive a W9 from that person or company. The W9 will provide the legal name of the business and the social security or EIN for that business. This information is then used to determine who should receive a 1099 form in January for the previous year's income over the $600 minimum.
Any accountant will tell you it is best to run your vendor reports from your accounting software to determine who was paid over $600 for the year and verify that you have a current W9 with the information entered into your accounting software. If you are missing the type of company structure, EIN, or social security number for someone paid, you have time to call and request the form.
Also, it is best to order the forms before the end of the year. Since it is about to be November, I would say order them now. The vendor report will give you an idea of how many 1099 forms must be ordered; personally, I always order a few more in case of errors.
When in doubt, you can always ask a reputable bookkeeper or accountant about the best practices for 1099 reporting.