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Understanding 1099s at MyBuilderCPA



Hello, Jon Markee here, founder and CEO of MyBuilderCPA. Today, I want to talk about a crucial aspect of our services: understanding 1099s. This can be a complex topic, but I’ll break it down for you.

The Origin and Importance of 1099s

The 1099 law came into effect around 2010 under the Small Business Jobs Act and has evolved since then. Essentially, any service provider paid $600 or more in a calendar year by cash, check, debit, or ACH must receive a 1099 from you. However, payments made via credit card are excluded because the credit card issuer is responsible for issuing a 1099-K. Congress implemented this to ensure all service providers, like myself, report their income and pay the appropriate taxes.

Collecting W-9s: A Crucial Step

To generate a 1099, we need your help in collecting W-9 forms from your subcontractors and vendors before you pay them. Once they’ve been paid, getting a W-9 from them can be challenging. Fortunately, W-9s do not expire, so once you have one, it’s valid indefinitely. Make sure to send W-9s securely using our client portal instead of email, as these forms often contain sensitive information like social security numbers or EINs.

Filing Schedule and Process

Throughout the year, you should collect W-9s from any new vendors before their initial payment. Our team at MyBuilderCPA will enter these W-9s into QuickBooks, where we also recommend you keep them in your job software, like Buildertrend. By entering this information into QuickBooks, we can easily prepare 1099s at year-end using the built-in module. This approach helps ensure we don’t overstate amounts on 1099s by correctly marking payment methods in QuickBooks.

Key Deadlines

Remember, 1099s must be filed with recipients by January 31st of the following year, not April 15th. This accelerated timeline means we need all W-9s by the end of the current year to meet the January 31st deadline.

Understanding the Difference: W-9 vs. 1099

A W-9 form provides the necessary information to determine if a 1099 is required and includes details such as the vendor’s tax identification number. The 1099 form is used to report the actual payments made to the service provider or vendor based on the information from the W-9.

Timing and Accuracy

We often get requests to send out 1099s in early January, but it’s essential to ensure your books are closed and accurate before issuing them. This prevents the need for amended or corrected 1099s. Typically, your 1099s will be available on the same day you receive your month-end closed reports in January, consistent with your service plan at MyBuilderCPA.

Conclusion

Understanding and managing 1099s can be complex, but we aim to make it as straightforward as possible for you. Collect W-9s from your vendors before making payments, and rely on us to handle the filing process accurately and timely. If you have any questions about W-9s or 1099s, don’t hesitate to reach out. We’re here to simplify this process for you.

Thank you for considering MyBuilderCPA, and have a great day!

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