Each year, companies must report to the IRS about certain types of payments made to third parties or attorneys during the year that were higher than $600. This information is reported on a 1099 Form. More information can be found on the IRS portal.  

The 1099 Form assists the IRS in its tax return validation processes. All businesses, Type C Corporations, type S corporations, Associations, limited liability companies (LLC) and sole-proprietorships must meet this requirement if the payments meet a number of conditions.

What does it take to prepare a 1099 Form?

To prepare a 1099-MISC Form, it is necessary to ask all service providers or contractors to complete the W-9 form  in which they provide their name, tax identification number and address. Download the W-9 form here.

How do I know if I have to file a 1099 form?

There are a significant number of conditions that require companies to submit a 1099 Form. In this post, we will cover the most common reasons why entrepreneurs with small and medium-sized businesses must submit this form.

  • Payments to Contractors, Partnerships, and Sole-Proprietorships: Any payments of $600 or more during the year to contractors, partnerships, and Sole proprietorships must be reported in 1099-MISC form; in most cases, these are reported as “Non-Employee Compensation”.
  • Payments to Attorneys: All payments of $600 or more made to attorneys must be reported on a 1099-MISC form.
  • Interest Payments: You have to report interest payments of $10 or more in a 1099-INT form.
  • Dividend Payments: Corporations that pay dividends of $10 or more, have to report the payment in a 1099-DIV form.
  • Lease Payments: Lease fees for office space must be reported in a 1099-MISC form when paid directly to the owner. When paid to a real estate agent, it is not required to issue a 1099-MISC form.

 

If you have any questions, please call our office at +1 (855) 396-8873 or write to 1099@gbsgroup.net  to assist you.