Running a business is no laughing matter. Not only do you have to develop and deliver a great product or service, but you have to find people kind and willing enough to take out their credit cards and pay for it.
Then there are taxes.
If you are used to being paid as an employee, there are quite a few unique rules and regulations that you need to comply with as a U.S.-based entrepreneur.
One of these rules is when and how to file a 1099.
Who needs to file a 1099?
According to frequent Escape from Cubicle Nation legal expert Kyle Durand,
If you own a business or are self-employed you MUST issue a 1099-MISC form to persons, vendors, subcontractors, independent contractors, and others if you paid them $600 or more per year for:
- services (including parts and materials),
- prizes and awards,
- medical and health care payments, and
- other types of payments not covered by another information reporting document (this includes payment for services completed using PayPal).
Or, if $10 or more per year is paid for:
- broker payments in lieu of dividends or tax-exempt interest, and
Exceptions: if the business you paid is 1) a corporation or 2) a foreign contractor, no 1099-MISC is required.
The deadline to file your 1099s for 2012 is January 31, 2013. You can get forms from http://www.irs.gov/.
If you are pressed for time, Kyle has created a very nifty filing service: Easy1099 (The direct link is http://taxreceipts.com/easy1099/). For a small fee, you can enter in the information for all your vendors, subcontractors and independent contractors and it will automatically send a copy to you, as well as file the 1099 forms with the IRS, and if necessary, with your state agency.
Happy 1099 filing!