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If you run a small business, then chances are you maybe required to file 1099’s.  These are probably one of the most misunderstood forms business owners file.

Here’s the scoop:

What are they for?

Form 1099 is used to report money paid to individuals who are not your employees.  The IRS uses your 1099 to make sure the people you pay are reporting the income on their tax returns.

Who should I file a 1099 for?

File a 1099 for everyone that is not an employee (individuals you’re not withholding taxes for) that you pay more than $600 to in a calendar year.  You are not required to file 1099’s for money paid to company’s (LLC, Corps).

 How do I file a 1099?

There are many service providers that will do this for you.  Whether it’s your accountant, or a web service, we recommend using one to assure that they are accurate, and filed timely.  All 1099’s should be filed and in the mail by Jan 31st.  But if you’re a DIY (do it yourself) type of person, there are plenty of services on the web that do this for you at a very reasonable cost.  Our favorite is Track1099

How do I keep track of how much and who to file 1099’s for?

This is easily done in accounting software like Xero and QuickBooks.  You can designate contacts/vendors as 1099 recipients, and as long as you record all your transactions, you can run a report at the end of the year that will tell you how much to file them for.  We recommend using Xero for this.  It’s easy, and will be a breeze to setup and do.

What happens if I don’t file 1099’s?

You may get away with it…for awhile.  But if the IRS decides to audit you, and you didn’t file, then watch for penalties coming your way!

What do I do if I have no clue what to do?

Easy, reach out to us and we can take care of from start to finish!  We can help no matter what state you live in.

 

Have questions, feel free to leave comments and we’ll answer them ASAP.  Want to reach out directly, fill out our “Contact” page and we’ll get back to you within 1 business day.

Thanks for reading!

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If you have income that is not subject to withholding you may need to pay estimated taxes to the IRS during the year. Whether you need to pay estimated taxes is dependent upon your financial circumstances, what you do for a living (if you’re self-employed for example), and the types of income you receive. Here are six tips that explain estimated taxes and how to pay them.

1. If you have income from sources such as self-employment, interest, dividends, alimony, rent, gains from the sales of assets, prizes or awards, then you may have to pay estimated tax.

2. As a general rule, you must pay estimated taxes in 2013 if both of these statements apply:

1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and tax credits, and

2) You expect your withholding and credits to be less than the smaller of 90 percent of your 2013 taxes or 100 percent of the tax on your 2012 return. Special rules apply for farmers, fishermen, certain household employers and certain higher income taxpayers.

3. Sole Proprietors, Partners, and S Corporation shareholders generally have to make estimated tax payments if they expect to owe $1,000 or more in taxes when they file a return.

4. To figure estimated tax, include expected gross income, taxable income, taxes, deductions and credits for the year. You’ll want to be as accurate as possible to avoid penalties and don’t forget to consider changes in your situation and recent tax law changes.

5. For estimated tax purposes the year is divided into four payment periods or due dates. These dates are generally April 15, June 15, Sept. 15 and Jan. 15 of the next or following year.

6. The easiest way to pay estimated taxes is electronically through the Electronic Federal Tax Payment System, or EFTPS, but you can also figure your tax using Form 1040-ES, Estimated Tax for Individuals and pay any estimated taxes by check or money order using the Estimated Tax Payment Voucher, or by credit or debit card.

Give us a call today if you need help making estimated payments.

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