You know that feeling you get in the last few months of the year when those deadlines begin looming? As members of a marketing agency, we know that deadlines are always going to be part of our daily routine. While it’s our responsibility to manage media deadlines, we know you have deadlines, too. And no matter what business you’re in, properly filing tax documents on time is something that applies to all of us. I have implemented some steps that helped me through the years and thought it might be of value to our clients or any other business professional responsible for tax preparation:
- Get started early! This may sound crazy, but the January 31st deadline for mailing the 1099’s to recipients comes faster than you think.
- Pull ALL vendors and make sure you have a current W-9 (within two years). Here is a link to access a blank W-9 http://www.irs.gov/pub/irs-pdf/fw9.pdf. Whether they need a 1099 or not, you are required to have them on file.
- Separate the W-9’s by Corporate and LLC/Partnership/Individual. Corporations do not need to have a 1099 sent to them, but I send them to all the others just to cover my bases.
- Make sure all correct information is in your system based on the signed W-9.
- Email, fax or call vendors that need a W-9 or updated one. I prefer to email since you can have an electronic copy if the printed one disappears.
- If they fall into the send category, there are some criteria to determine if you need to send a 1099 or not. You can go to irs.gov/uac/Form-1099-MISC,-Miscellaneous-Income- for a complete list.
- If you are going to print the 1099’s on a laser printer, do not order the forms from the IRS website because they send carbon copies that won’t go through your printer. I prefer to purchase a 1099-MISC laser printer set (4 or 5 parts) as it comes with all copies you will need. Make sure you order the 1096 forms and envelopes because they are not usually included in the set. I order about 10 percent more than I actually need (in case of errors or re-dos). Do not print the forms from the IRS website because a penalty may be imposed for filing forms that can’t be scanned by the IRS.
- I print each part copy (i.e. Copy B Recipient then State Copy 1 etc.) all at once. After they are printed, I double check information has lined up correctly. I also check to make sure the Employer Identification Number (EIN) or Social Security Number (SSN), name and address are correct based on the W-9.
- Send the “Copy B for Recipient” copies out first since they have an earlier deadline. All of the “Copy B for Recipient” copies need to be separated by individual and mailed in 1099 envelopes post marked by January 31st. I usually will wait a couple weeks after mailing them before filing the other forms because you may get a few back due to incorrect information. This alleviates the need to submit a “Void” or “Corrected” one. All of the “Copy A for Internal Revenue Service Center” copies need to be filed with the form 1096 and mailed by a deadline that usually falls in late February or early March. All of the “Copy 1 for the State Tax Department” copies for Massachusetts need to be filed with a copy of the form 1096 and mailed by a deadline that also falls in late February or early March as well. Check each state as they may have different requirements for filing. No stapling or folding is accepted so I usually mail them in a 9×12 envelope. I prefer to send the State and IRS packages via Certified Mail to ensure a receipt.
- I make a copy of the form 1096 for my records to go along with the “Copy C for Payer” copies. I also keep the 1099 vendor list printed which usually identify the vendor, EIN or SSN, and amount. If you need more information you can access the Internal Revenue Service’s instructions here: http://www.irs.gov/pub/irs-pdf/i1099msc.pdf.
Lastly, if you find the process to be too much or need a little help, let us know. We just happen to have a client in the business we can introduce you to!