210 - Sending Your 1099s
On today's episode of the Unf*ck Your Biz podcast I cover why, how and when you need to send 1099s. I'm answering the commonly asked questions like - who sends them, who gets them, how do you send it, and when are they due?
This episode of the Unf*ck Your Biz with Braden podcast is sponsored by the Contract Vault, a $30 resource filled with a wide variety of must-have contract templates. Also, stay tuned because in the coming weeks I will be releasing the Tax Season Playbook designed to help you navigate tax season.
It's 1099 season. These tax forms are due at the end of January and on today's episode I'm going to answer your questions about sending 1099s. I've been answering a lot of questions about 1099s in the Braden's Besties group so I wrote a blog post about it that I'm continuing to update as questions come in, and I'll be sharing all of that information in this episode.
We send 1099s because the IRS requires us to. If we spend money to contract out a service, we take it as a deduction because it's a business expense and the service provider files it as income.
Third party payment processors are required to issue 1099-Ks if their users meet certain income or transaction thresholds. For example, I earn about 95% of my income through this website, which is connected to Stripe. The bulk of my income will be on the 1099 I get from Stripe.
The general rule is that according to the IRS you must file a 1099-NEC “for each person in the course of your business to whom you have paid during the year . . . at least $600 in . . .services performed by someone who is not your employee.”
You need to send a 1099 if the following are true
1) The person was a non-employee
2) The person worked on behalf of your business
3) You paid that person $600 or more in total during the tax year
4) You paid that person via cash, check, or ACH, or if you used a personal 3rd party provider (You are not required to issue a 1099 if you paid the service provider by credit card, paypal, or other “third-party network providers." These service providers typically send a 1099-K)
I use Gusto to pay my virtual assistants and Gusto makes it really easy for me to send them a 1099.
099.