Alright beauty professionals, today we’re talking about arguably the sassiest of the tax forms: the 1099! You’ve probably got more than a few of these to issue this tax season, so let’s get you moving!
Who needs to receive a 1099 from me?
Anyone to whom you paid $600 or more in 2020 for services within your business - vendors, subcontractors, landlords, lawyers, etc - should receive one. If you made rent payments, one-time service fees, gave prizes or awards, and made any other payment to a company or individual exceeding $600 for any reason relating to your business, they need a 1099 from you.
If you are a booth rental or suite rental stylist, you need to issue a 1099 to the salon owner.
Who doesn’t need to receive a 1099 from me?
Recipients of personal payments don’t need a 1099. Recipients who received payments made by credit card or to a business PayPal account will not need a 1099 from you: in this case, both the credit card merchant and PayPal will issue 1099s as needed.
If the payment recipient is a Corporation or S-Corporation, they don’t need one. And if the payment was made to non-US residents for any work done entirely outside of the US - no need!
Changes to the 1099 you need to know for 2021 tax season
As of 2020, there is a new form you must issue if you made payments to non-employees (i.e. contractors). Previously in Box 7 of the 1099-MISC, the NEC (non-employee compensation) is now its own form: 1099-NEC.
Rent payments, however, are still claimed on the 1099-MISC, in Box 1.
What you need in order to issue a 1099
Hopefully you've already given W-9s to your frequent contractors to fill out, but if you haven't yet, now is the time.
The W-9 form will contain your contractor's Taxpayer Identification Number (TIN). You’ll need this number for filling out their 1099, as well as other basic info like their full name and the name of their business. If it takes more than 5 minutes to fill out, they’re doing it wrong.
How to issue a 1099 easily
Quickbooks is your best friend during tax season, so if you’re not already using it, this is me giving you the gentle nudge that it’s a really good idea. Quickbooks makes it easy to issue 1099 forms. If your contractor files have been kept up to date, Quickbooks will automatically transfer all needed info to your 1099 forms. Remember, friends: good bookkeeping always pays off, and so does an investment in Quickbooks!
1099online.com is an affordable way to issue a 1099 by mail or electronically, if you don’t have or want Quickbooks. You will need the recipient's W-9 and email address in order to issue this way.
Deadline and penalties for late issuing of 1099 forms
The deadline to issue a 1099 is Jan 31st. There is a $50 penalty per 1099 for each month past Jan 31st. Don’t mess around with this - penalties like this add up fast. Get those 1099s issued ASAP. Like, today.
Your friendly CPA is here to help you
Have more burning questions? Not sure if a certain payment you made is 1099-able? We’ve got you covered. Give us a call or an email - we’ll get you sorted and filed, headache-free. Now go tackle those sassy forms!