A friend, collegue and client (I just love when they’re all rolled into one!) recently asked me:
How do I know when I need to issue a 1099 for a vendor? So far I have a VA who is working project based (and has other employers) and invoices me for services provided. What about an accountant or bookkeeper?
Here’s my response to her: You’ve asked a really important question about the 1099s.
To answer that you need first to get a Form W-9 from them. Up front. Before you pay them a dime. And if you didn’t get one up front, get one NOW.
The W-9 is an IRS form that tells you whether they are 1099 material or not. Download the form here, send it to every vendor you work with, and make completing it a requirement before they get paid from you. This needs to be part of your onboarding process with any new vendor from this point on. Before they get paid, they have to send you a completed W-9. Otherwise, it can be like pulling an elephant through a knothole to get a W-9 after the fact in January 2016, as 1099s are due to vendors by 1/31/16 and the IRS by 2/28/16.
The second thing is to read Nolo Press’s information on which of your vendors meet the criteria to get a 1099, ’cause not all of them do. Nolo does such an excellent job of laying it out, please go straight to the horse’s mouth for the deets. It’ll also tell you how to file the 1099s with the IRS. Nolo rocks!
I’ll tell you another reason to get W-9s from each of your vendors: you’ll get a better idea of who might really be considered an employee rather than an independent contractor. But that’s a whole other post!
Please leave a comment or ask a question. I love to hear from you!
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