Get a Form W-9 from each vendor that you do business with.
Click Here for a link to the IRS Form W-9
Take this blank form, fill in the requester’s name and address, and send copies to each of your vendors. This form will give you the Federal Id number of the vendor, type of entity, and the correct company name and address. Keep copies of the W-9 forms in a file. Then in the future ask new vendors to complete a W-9 form.
More details regarding 1099 Filing:
There are numerous 1099 forms used to report a variety of transactions. However, the most common 1099 for a small business is form 1099-MISC, which is used to report miscellaneous income payments to non-employees (contractors). This 1099 form is due to the contractor before January 31 and to the IRS before February 28 of the following year. Copies should also be sent to states where required. The business must also file a form 1096 which summarizes the 1099 MISC form information. The form 1096 and the 1099s are filed with the IRS together as a package.
There should be a 1099-MISC filed for each person you paid as follows:
- Payments of $600 dollars or more to contract employees, independent contractors and/or consultants, physicians, physician’s corporation, or other providers of health or medical services, purchases of fish for resale, and crop insurance proceeds
- Payments of $10 or more for royalties, substitute dividends and tax exempt interest
- Payments of any amount to attorneys and crew-members of fishing boats
- Payments of any amount to persons subject to the backup withholding rules
- Sale of $5,000 or more of consumer products for resale anywhere other than a permanent retail establishment
Penalties for Late Filing
1099 MISC forms filed after the return due dates are subject to the following penalties:
- For corrections made within 30 days after the filing date, the penalty is $15 per 1099, with an annual maximum of $25,000 for small businesses.
- For corrections made between April 1 and August 1 of the calendar year in which the 1099 was due, the penalty is $30 per 1099, with an annual maximum amount of $50,000 for small businesses.
- For corrections after August 1 of the year the 1099 is due, the penalty is $50 per 1099, with an annual maximum amount of $100,000 for small businesses.
Penalties for not filing:
Penalties for not filing could be $100 per statement and you could be liable for some of the recipient’s taxes.
Under specific conditions, payers making certain payments to payees must withhold federal income tax from those payments at the federal backup withholding rate, which is currently 28%. Backup withholding maybe required if the payee did not provide you with a Taxpayer Identification Number.
If you have any questions, please contact us at 616.393.0398.
Geenen & Kolean, PC