While you’re wrapping up 2014, give yourself the gift of reduced stress in the new year by getting a head start on January’s information reporting responsibilities. Here are some preliminary steps to take.
* Review your general ledger. Even if you’ve already identified “1099 vendors” in your payables system, review current-year expenses to make sure no new or infrequent payments have been overlooked.
* Verify vendor information. Check your files for up-to-date Forms W-9, the form you use to request a vendor’s federal taxpayer identification number (TIN). In general, you should have Form W-9 on file for each vendor who provides services, even if the transaction is a one-time event.
Why? Filing “mismatched” Forms 1099 — where the combination of name and TIN do not match IRS records — will result in a notice and possibly penalties. To avoid problems, consider signing up for the TIN Matching Program, an online service run by the IRS, so you can verify identification numbers prior to filing 1099s.
You obviously won’t know the dollar amount to report on the 1099s until after year-end. But you can start to assemble the list of recipients, verify whether they’re a corporation, and obtain their taxpayer ID information. Ideally you would have a process to collect this information when a new contract is signed. But if not, December is a perfect time to do the ground work. Then you might have one less crash project at the end of January. Contact our office if you need more information on your 1099 reporting requirements.
Written by: Doug Rodrigues