Form 1099 for Services, Rents, Royalties And Interest paid
need to be sent out by January 31,
If you want us to prepare Forms 1099 for you, submit the PAYEE INFORMATION FORMS by January 10th, .
The 1099 reporting rules are ever more complicated this year. Our fee for preparation and filing Forms 1099 is $130 for the first one plus $50 for each additional. This includes preparation of the forms, mailing them to the recipients, and filing with the government.
To keep your cost down we encourage you to gather your information in full before sending it to us.
Additional bookkeeping required to calculate amounts or hunt down information will be billed hourly.
Government correspondence or other related issues will be billed hourly and are not included in the fee for preparing the 1099 Forms.
We are not responsible for any penalties and/or interest for treating employees as independent contractors or submitting incorrect/late information to us.
The penalty for late filing can be as much as $280 for each Form 1099.
If in the course of your business you have paid for independent contractor services (including parts and materials) or have paid rents (such as for office space or equipment) a Form 1099 must be issued. Fees paid to accountants and lawyers are to be reported.
- A form 1099 must be issued to: individuals, partnerships, LLCs, and only law corporations if you made payments for services (including parts and materials) or for rents totaling $600 or more for . No other corporations get 1099s for services.
- Royalty and Interest payments totaling $10 or more for the year are to be reported.
- Only include amounts paid by cash, check, money order and wire transactions from your bank account. DO NOT INCLUDE payments made by PayPal, credit card or debit card to these independent contractors because the credit card company will be reporting these amounts.
To gather information the payee needs to complete a Form W-9 for you. Going forward, it is advisable to have them complete their W-9 prior to the first payment to them. Form W-9 can be found online. Please provide our office with copies of all completed W9s.
CONSULT YOUR EMPLOYMENT ATTORNEY REGARDING CLASSIFICATION OF INDEPENDENT CONTRACTORS
For classifying workers as independent contractors under AB 5, most independent contractors are considered employees unless a three-factor ABC test is satisfied. This rule took effect January 1, 2020.
All three conditions of ABC test must be met in order to treat a worker as an independent contractor:
- The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.
- The worker performs work that is outside the usual course of the hiring entity's business.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
The state has launched a new website to help you understand the ABC test, AB 5, and your obligations as an employer. Please visit https://www.labor.ca.gov/employmentstatus/ which contains information from various state entities.
We are not responsible for misclassifying workers.
If you want us to file these forms for you contact Karen in our office