Date: January 13, 2023
Business Owners – Your 1099 Due Date is Approaching Quickly
With tax season upon us, it is easy to get deadlines confused. Most business owners feel overwhelmed and tend to postpone anything to do with taxes. As you may know, the tax code is purposely written to be confusing. This makes many business owners groan in despair at the thought of preparing their tax returns. Don’t be discouraged – we are here to help! Here are some tips for the upcoming tax season.
• Don’t forget this important due date – Business owners utilizing independent contractors (freelancers, etc.) need to have any 1099-NEC (which stands for non-employee compensation) totaling $600 or more to the recipients by January 31st 2023. If e-filing (which is the fastest and recommended route), the due date to have the 1099- NEC filed to the IRS is also January 31st.
• Keep in mind – anything that is a product purchase (like tires) doesn’t need a 1099 – what you will need the 1099-NEC for is services provided and legal and professional services (like attorneys, CPA’s, etc).
• Here are some examples of other 1099 forms that are common: 1099-MISC, which is used to report miscellaneous income or information such as rent, or gambling winnings, etc. 1099 – INT is used to report interest income. Banks (and other financial institutions) must file a Form 1099-INT on paid interest over $10.
• Did you know that if you pay your contractors/service providers via credit card you do NOT have to file a 1099 reporting it? This is due to the reporting requirements of electronic payment processors – why not get some extra points/benefits from your credit card AND decrease your reporting requirements at tax time? Paypal, Stripe, Venmo, Cash App, etc are the same – electronic third party payment processors have to handle the 1099 reporting in that scenario – so pass the filing burden off when possible, it is a great way to save you time and sanity.
With this first major tax due date right around the corner, now is the time to think about having a professional in your corner. We love the tax preparation process because we know if you do it right from the beginning, then you don’t have to worry. By being proactive and working with a qualified tax strategist who understands your specific needs, you can ensure that you’re paying the least amount of tax possible, all while growing your business. When it comes to taxes, there are a lot of things that business owners need to know in order to avoid making costly mistakes. We are passionate about protecting entrepreneurs and helping them crush their financial goals! If you would like more information or guidance, please contact us here for a complimentary assessment of your needs.