Businesses must send 1099 tax documents for all vendors, suppliers or contractors every year. This allows the business report an expense to another company. All 1099 forms must be sent out by January 31st to tax payers to be considered legitimate by the Internal Revenue Service. After this date, the deadline for 1099 forms is expired and your mailings are considered late.
Important Fine Print
However, there is some fine print that you should be aware of. If the January 31 date is on a weekend or legal holiday, business owners have until the next day to mail out their 1099 forms. For years like 2015 and 2016, where that is the case, businesses receive an extra day to do their 1099 mailings.
Do Not Procrastinate
Even though your business may have an extra day, it is never a good idea to procrastinate when it comes to taxes and the IRS. Whenever possible, business owners should meet with their accounts early to avoid the rush and get things done ahead of time. This way, if you have any trouble with other aspects of your return like how to apply FICA tip credit, then you can solve it with some time left over. If your business has its own accounting department, management should provide more aggressive deadlines to ensure everything is completed on time.
Stay In Good Standing With The IRS
Furthermore, by following the 1099 deadlines accordingly, your business will be in good standing (as far as your 1099 form timing goes) with the IRS. As long as the 1099 is mailed out by the deadline, your business will avoid potential penalties or fines for lateness. When it comes to business taxes, it is important to stay ahead of the game. Just like any other business process, it is importance to have control in order to manage it properly.
1099 Penalties To Avoid
There are two types of 1099 penalties that, depending on which end of the transaction you are on, you are going to want to avoid. You can be penalized for not issuing the 1099-MISC form to qualified individuals if you are a small business owner that hires freelancers. This fine can cost you up to one hundred dollars per form not issued. You certainly do not want to have to pay that. Or if you are a freelancer yourself, you can be penalized for not filing this form or accurately reporting on the 1099. If you misreport your earnings, you will be fined 20% of the money you did not report. That could add up to quite a bit of money, so be careful!
Be Careful With 1099 Forms
Additionally, it is important to be very careful with your 1099 form mailings. If you are rushing to meet the deadline for 1099, you run the risk of missing payments or reported expenses. And, you can be sure that most vendors or suppliers will not remind you that they were expecting a 1099. Of course, your suppliers and vendors would rather over report their income a little bit so they are not have a misrepresentation of their records.
To properly file business taxes, be sure to stay in control of all the forms required like the 1099. First thing out of the deadlines, you will have less risks, headaches and problems. Finally, it will also make life a little bit easier for those companies receiving the 1099 form from you.