1099 Deadlines, Penalties & State Filing Requirements for 2018

Posted on by Elite Financial Management

As the end of January approaches, it is important for all the employers to prepare and issue 1099’s to the recipients, and file them with the IRS without any delay.

1099 tax form, referred to as “Information Returns,” should be sent to independent contractors if you paid more than $600 to them in 2017. Since there are many types of 1099 forms, the common forms are 1099-MISC, 1099-INT, 1099-S, 1099-C, 1099 B, 1099-R and 1099-DIV.

It’s important for the employers to prepare and file the appropriate 1099’s to the IRS before deadline otherwise heavy penalties for late submissions or wrong information will be imposed. The following table will help you to remember all the dates for sending tax forms to the contractors and for paper filing or e-filing them with the IRS.

 

1099 Deadlines for 2018

Penalties for Late Filing

The penalties range from $50-$530 per missed 1099 tax form, depending on how late the forms were submitted.

 

The maximum penalty is a total of $1,064,000* for small businesses. In all cases, the IRS considers you to be a small business if you’ve earned an average of $5 million or less in annual revenue for the past three tax years.

 

 

New State Filing Requirements

Combined State/Federal Program for 1099-series

Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, South Carolina, Vermont, Virginia, Wisconsin.

States with no 1099-MISC filing requirement:

Alaska, Florida, Illinois, Nevada, New Hampshire, North Carolina, New York, South Dakota, Tennessee, Texas, Washington, Wyoming

States that require 1099-MISC filing, if you withheld:

Kentucky, Rhode Island, Utah, West Virginia

States that require a separate 1099-MISC filing or are unclear on their filing requirements:

Iowa, Massachusetts, Oklahoma, Oregon, Pennsylvania, Washington DC

We hope you will be feeling prepared, informed, and ready to file your 1099’s. If you would like a professional to do them for your then our 1099’s Made Easy package is ideal for you. Book your consultation below:

If you have any questions about the 1099 filing, you can reach us at any time. We’d be happy to help you out.

 

Juanita is the owner of Elite Financial Management, an Atlanta, GA based accounting firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Juanita loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found reading, cooking, and hanging out with her family.

 

Getting 1099’s Out the Door!

Posted on by Elite Financial Management

 

It’s January!

One of the most important financial tasks that you need to accomplish during this month is completing and dispersing 1099 returns for your team, contractors, and company vendors.  This can be a source of great stress for many business owners, due to tight deadlines and the fear of the large penalties for completing them incorrectly.

Don’t worry I have a 3 step process you can walk through to take care of them right now.

(Want us to handle it for you? – just book a call and we’ll take care of it!)

 

 

STEP 1: PREPARATION

You will need to have a list of everyone that you paid throughout the year so that you can review it during this exercise.  The easiest way to pull this report is from QuickBooks (assuming you have your records all updated in there).  You can use the Expenses by Vendor Summary report (but you will want to double check this, because if you made an error and paid someone as a ‘customer’ then they won’t show up on this report.

You can also run a Profit & Loss report and click into each account to see who the vendors are that have payments posted to them and make a manual list.

STEP 2:  IDENTIFY WHO

Here’s an easy way to determine who will need one, with these quick questions:

  1. Did you pay them for services? You only need to issue a 1099 to those vendors who provide you with services.  For example, your graphic designer, business coach, virtual assistant, etc.
  1. Did you pay them via check? You only need to issue a 1099 for payments made via check, wire, or electronic payment from your bank account.
  1. Did you pay them more than $600? This is pretty self-explanatory.  Only amounts more than $600 have to be reported on 1099 returns.  If you paid someone partially via checks and partially with credit cards, only total the amount paid via check.
  1. Are they an LLC or Sole Proprietor, Estate or Partnership?

To answer this question, you will need to look at their W-9 form, specifically box 3.  If they have checked the first box “Individual/Sole Proprietor or Single Member LLC”, the 4th box for partnership, or the 5th box for estate then you will need to issue them a 1099. If you don’t have a W9 on file for them, request it from them ASAP!  Use this link to download and send to them.

The exception to this rule is your attorney. You are required to report anything over $600 paid to your attorney on a form 1099 even if they are a corporation.

STEP 3:  HOW TO FILE

Now that you know WHO you need to issue your 1099 returns to, you can use your bookkeeping software or an online software like Track1099.com to actually issue them.

WHEN ARE THEY DUE

1099’s are due to both the recipient and the IRS by January 31st.

It’s easy to take care of your 1099 returns by following the simple steps laid out for you above.  However, if you want to let our professional team handle it, our 1099s Filing package is perfect for you.  We will review your bookkeeping records for you, determine who needs to receive your 1099 returns and take care of all of the filings for you.  It’s just $297, plus $5 per form filed.   (Prices increase to $497 + $5/form after January 20th)

(If you want us to just take care of this for you, book a call with me today to chat about it…)

 

 

 

 

Juanita is the owner of Elite Financial Management, an Atlanta, GA based accounting firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Juanita loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found reading, cooking, and hanging out with her family.

 

Year-End Bookkeeping Checklist

Posted on by Elite Financial Management

Can you believe the end of the year is quickly approaching? To help get your books in order and ready to send to your tax preparer here is a year-end bookkeeping checklist to help keep you organized. Keep in mind that every business is different. This list is meant to provide you with a general idea of items to take care of before December 31, 2017. When in doubt or if you have questions, seek guidance from a professional who knows your specific business situation.

End of Year Bookkeeping Checklist:

  • Get Organized: Find all the receipts for any deduction you are claiming on your tax return. Keep in mind that no receipt equals no deduction.  After collecting all receipts, look over your personal bank statements for any business charges you paid for out of your personal account. Do the same with your business bank statement, but this time look for any personal expenses paid out of your business account. Make a list of these transactions to give to your tax preparer.
  • Reconcile Your Bank Account(s): Bank Reconciliations are a great tool to verify all transactions have been posted into your accounting software. This ensures your general ledger bank balance (the bank balance in QuickBooks) matches your bank statement. If not, fix any mistakes you discover in the process.
  • Invoices: Have you invoiced all of your customers for work you’ve done and products you’ve delivered/shipped for the year? If not, get caught up on those invoices.
  • Collections: Follow up with any customers who owe you money. Send them a past due statement and/or give them a call to remind them they owe you money. Now’s a great time to collect your receivables. Look through your accounts receivables. Are there any receivables that you are unable to collect that need to be written off your books or sent to a collection agency?
  • Inventory: Verify your inventory balance is correctly reported on your balance sheet. The best way to do this is to have an accurate count as of December 31st. You’ll also want to verify that your inventory is valued correctly – determine if any inventory items cost more than they’re worth and need to be written down. Remember, your tax preparer is going to need the following to prepare your tax return: 1. Inventory balance at the beginning of the year (January 1st); 2. The cost of inventory purchased throughout the year; 3. The amount of inventory that was sold during the year; 4. The ending inventory balance as of December 31st.
  • Fixed Assets: These are the larger purchases you made throughout the year (i.e. equipment, automobiles, furniture, computers, etc.). Do you still have all the fixed assets that are reported on your balance sheet? If not, record the sale or disposal of these fixed assets. Don’t forget to verify the depreciation on your fixed assets as well (if you don’t know how to do this, contact your CPA. They will be able to generate a depreciation schedule for you). Make any necessary adjustments.
  • Expenses and Accounts Payable: Verify all of your accounts payables have been recorded in your accounting software, such as QuickBooks. Now’s a great time to make your 401(k), SEP IRA, and Simple IRA contributions, if you have not done so already.
  • Notes Payable: Verify your notes payable (i.e. loans) amounts on your balance sheet match the statements from your banks. Are you missing any notes payables? Do you have any notes payables that you paid off during the year or debts that were forgiven? Make any necessary adjustments. Not sure how to make the adjustments? No worries, make a list to give to your tax provider or contact a CPA to help you make the necessary adjustments.
  • Mileage: Great news, you can deduct $0.535 per mile for business miles driven in 2017. That means any trips to clients or for meetings are deductible. There are a few apps out there that can track your mileage for you. Please note that your daily commute does not qualify for the deduction.
  • Collect W-9’s: If you have not collected W-9’s from your vendors and/or contractors you paid $600 or more to throughout the calendar year, now’s a good time to collect those. Don’t forget your 1099’s are due on January 31st.
  • Payroll Taxes: Verify your payroll tax liabilities match your quarterly payroll returns.
  • Double Check your Profit & Loss: After making all of the adjustments listed above, double check your P&L Statement. Make any necessary adjustments. Remember, no receipt equals no deduction.
  • Create a Budget for Next Year
  • Back up your accounting software file to protect you from loss of data.

 

Juanita is the owner of Elite Financial Management, an Atlanta, GA based accounting firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Juanita loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found reading, cooking, and hanging out with her family.