CPA & Business Advisory Blog

Should You Be Filing Form 1099-MISC For Your Business?

Form 1099-MISC: Miscellaneous Income is used for reporting certain payments made in the course of your trade or business.  Personal payments are not reportable.

When is Form 1099-MISC required?

Businesses or self-employed individuals will need to fill out a Form 1099-MISC for persons, vendors, subcontractors, independent contractors, and others in the following circumstances:

$600 or more per year is paid for:                    

  • Cash payments to fish or other aquatic life you purchase from anyone engaged in the trade or business of catching fish
  • Any fishing boat proceeds
  • Crop insurance proceeds
  • Medical and health care payments
  • Prizes and awards
  • Proceeds paid to attorneys
  • Rents
  • Services (including parts and materials)
  • Other types of payments not covered by another information reporting document

$10 or more per year is paid for:

  • Broker payments in lieu of dividends or tax-exempt interest
  • Royalties

Steps to Take to Prepare for 1099 MISC Forms:

  • Request that your vendors, contractors and other payment recipients submit to you a Form W-9 (Click here to download Form W9).  The W-9 will provide you with the correct legal name, address and taxpayer identification number for the vendor, which is the information you will need when preparing any 1099-MISC forms.
  • You should also keep track of your payments in your bookkeeping system to know the exact amount you paid the recipient for the year.

Penalties for Filing Form 1099-MISC late:

  • $30 penalty for filing a 1099 for being 30 days late; maximum penalty $250,000 per-year ($75,000 for small businesses)
  • $60 penalty for filing a 1099 more than 30 days late, and before August 1; maximum penalty $500,000 per-year ($200,000 for small businesses)
  • $100 penalty for filing a 1099 on or after August 1; maximum penalty, 500,000 per-year ($500,000 for small businesses)
  • $250 penalty for intentional failure to file

Deadlines for 1099-MISC forms:

  • January 31: Provide the recipient with his or her copy of the Form 1099-MISC to report income for the previous calendar year
  • February 28: Mail the Form 1099-MISC to the IRS
  • March 31: Or, electronically file 1099s with the IRS

For more information on Form 1099-MISC, or any of our other small business services leave a message below, or contact Deb Herr at 440-449-6800.


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