The Process Of Filing A Form 1099-MISC For Your Business.
The Internal Revenue Service uses the form 1099-MISC to trach miscellaneous income in a business. The IRS uses this form to track all payments that you made to independent contractors if you are a small business owner. Anyone that you hire to do a service for you on contract is an independent contractor.
An independent contractor that you pay includes someone like a web designer or a copy writer. You only need to file a form 1099-MISC every year if you hired an independent contractor that particular year. For employees, you should not file a form 1099- MISC for them, they have a wage file for themselves so make sure not to misclassify them to avoid a penalty that comes with that.
The easiest way to file a 1099-MISC is through the online channel. You will be guided through the process of filing taxes on the site. To file the 1099-MISC form, the first step that you take is to gather all the needed information. The information includes, the amount you paid the independent contractor, the contractor’s legal name and address and the tax identification number. You can have the contractor fill out a W-9 in order to get the needed information. Make a thorough check on your account books to confirm everything.
When filling a form 1099-MISC, there are two copies which are copies A and B. The copy that you submit to the IRS is copy A while the independent contractor should receive the copy B. Filling out form 1096 is a necessity if you are physically dropping off your form 1099-MISC. Make sure to put the state in which your business is located, it is one of the requirements. There is a penalty that comes with late filing of returns, make sure that you hit the deadlines.
If you are filing a form 1099-MISC online, the process differs a little with filing returns physically. If you want to complete the whole filing process, you need to have the FIRE system. After filling out copy A of the form 1099-MISC in that way, you then mail it to the IRS. For the copy B, you need to email the independent contractor.
Make sure to ask for consent from the contractor even before you email the form 1099-MISC. There is a system used to ask for consent from the contractor before you email in order to show the IRS. You have to comply with the IRS rules and have all the requirements when sending the email. You can thereafter send copy B of the form 1099-MISC when the contractor responds by giving you consent.