Save time and money with annual 1099 preparation

According to IRS regulations all businesses are required to file 1099-MISC forms to any non-incorporated contractor they paid $600 or more to over the course of the year.

Tips to Help Save You Time and Frustration at Year End:

  1. Be sure to obtain a completed and signed form W9 for all contractors/sub-contractors (the best time to get this is before you pay them)
  2. Immediately enter their data into your Quickbooks or other accounting software
  3. In Quickbooks be sure that you have also selected “Vendor is Eligible for 1099” on their “vendor” profile
  4. Carefully review your Chart of Accounts to determine which accounts will require review at year end to assure any vendors paid and coded to those accounts are captured for processing
  5. Under “1099 Preferences” in Quickbooks be sure to “map” all applicable Accounts as determined in the step above

How a Virtual Assistant Can Save You Time and Money on 1099 Preparation:

  1. Most office supply stores sell in minimum quantities of 25 – if you have have a few to prepare this can seem wasteful on numerous levels.
  2. If you do not file on time or at all you could be subject to penalties from the IRS or state agencies.
  3. If you do not have a computerized bookkeeping system you may find it cumbersome to print the forms (unless you have a prehistoric typewriter in your office)

What I do with all of my clients (even ones I do not do bookkeeping for) is have them submit the following information so that I can prepare and mail the 1099-MISC forms to all contractors.

  1. Determine if my client’s State Department of Revenue requires 1099 forms (and any income thresholds dictated by the State)
  2. If they use Quickbooks I have them provide me with a portable version of their Quickbooks file
  3. Don’t use Quickbooks? Provide documentation of the following for each contractor:
    • Legal Business Name
    • Complete mailing address
    • FEIN or SSN (as applicable for their business entity structure and as completed on their submitted W9)
    • Dollar amount paid in the calendar year
    • My client’s business name, complete mailing address and FEIN numbers

Once I have the above listed information it’s easy-peasy for me to complete the remaining steps:

  1. I will contact vendors with no W9 on record to obtain the required document
  2. If the client does not provide me with a Quickbooks file I set up a “dummy” company in my Quickbooks file and enter in the annual amounts paid to each contractor
  3. All 1099’s are prepared and mailed directly to the contractors
  4. Client’s copy of the 1099, Copy A and Form 1096 are PDF’d and emailed to the client for their permanent records
  5. The hard copies of the client’s copy of the 1099, Copy A and Form 1096 are mailed directly to the client with an addressed envelope to the appropriate IRS location (and a note
  6. Any state documentation and forms are handled in the same manner as outlined in Steps 4 & 5

If you cringe at the thought of preparing and processing your 1099-MISC forms I’d be more than happy to assist you in 2011.