Are the 1099s Ready to Send?
Did they finish the W-9 Audit? Are your 1099s ready to send?
Lots to do this year! Is January covered?
The W-9 Audit should be finished by year-end, every year. Ensuring you have a W-9 from your vendors and have sent accurate Form 1099s keeps your company compliant. The W-9 identifies vendors that are required to receive a 1099 - partnerships, companies that operate under a sole proprietor, landlords and lawyers paid $600 or more a year. Payment of any royalty requires the recipient to receive a 1099.
To do this properly, service providers must give you a signed Form W-9 including the company name, address and EIN (employer identification number). If the company operates as a sole proprietor, the individual’s name and Social Security number is required.
BEST PRACTICES: REQUIRE FORM W-9 BEFORE INITIAL PAYMENT IS ISSUED.
The IRS is very serious about 1099s being filed correctly and timely. Failure to secure a Form W-9 and/or issuing Form 1099-Misc with an incorrect EIN, the IRS can hold the issuing company responsible. When notified by the IRS, payments to vendors may be subject to the company withholding a tax on the amount paid. There is the potential for substantial penalties for each failure to file a required Form 1099. We strongly recommend that you request a W-9 from a vendor, before an initial payment is issued. The IRS Form W-9 can be downloaded from: http://www.irs.gov/pub/irs-pdf/fw9.pdf.