January is upon us. Do you know where your business’s 1099’s and W2’s are? Do you have a plan for getting them out on time?
January 31 has long been the deadline to send 1099’s and W2’s out to recipients, and that hasn’t changed. What’s new this year is that you also have to file them with the IRS by January 31, instead of February 28 or March 31. This is intended to make it easier for the IRS to prevent refund fraud.
W2’s are the wage and withholding statements issued to employees. If you use a firm or service for your payroll, they should handle this for you. But don’t assume! Because if they don’t, YOU are the one who will be sweating the IRS notice.
There’s an alphabet soup of different 1099 forms—A, B, C, DIV, H, INT, etc. They cover a broad array of payments, from interest and dividends to rents. Most of them you’re more likely to receive than send.
The one most horse businesses need to pay attention to is 1099 MISC, specifically “Box 7” for reporting “non-employee compensation”. What is “non-employee compensation”? It’s everything you pay to a non-employee individual or non-corporate entity during the year for services to your business. If the total of payments was more than $600, you’re required to report it to the IRS in Box 7 of Form 1099 MISC.
What are common examples where a horse business needs to issue 1099 MISC?
- Commission paid on the sale of a horse
- Freelance grooms & braiders
- Contract labor
- Accountant/tax preparer
Chances are your business will need to issue at least a few 1099 MISC forms for 2016 payments. Hopefully you’ve reviewed your books and made sure you have a taxpayer ID (Social Security Number or Employer ID Number) for each recipient. If not, the clock is ticking and you need to get that done ASAP.
Download the form for requesting Tax ID numbers directly from the IRS at https://www.irs.gov/pub/irs-pdf/fw9.pdf.
Some accounting software allows you to generate 1099 MISC forms directly from their system. For those that don’t, there are a variety of stand-alone programs on the market. The better ones allow you to go paperless—e-file with the IRS and email the returns to recipients.
If you’re like most business owners, though, your time is better spent taking care of your clients and horses, than figuring out 1099’s. Stable Books offers outsourced preparation and filing of 1099 MISC and all other required tax forms. Schedule a free consultation to discuss how we can take the headache out of tax season for your business.