Direct Sales 1099 category
Who are Direct Sales people for 1099 reporting purposes? And if it's just a sales person woking soley for commissions do we have to report any disbursements to them under $5,000.00?
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Gloria269
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01/29/11 1:55pm PST
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Mary1638
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01/29/11 2:24pm PST
I think you should Google IRS 1099misc instructions for specifics. Box 9 I believe should be checked only if you had some sort of arrangement to sell $5000 or more in merchandise to an individual who then resells it and keeps a commission for doing so. So it sounds like if you consign $5000 of merchandise to Joe Smith and he sells it and he pays you $4000 and keeps $1000 in commissions, you would place a check mark in box 9 and report $1000 in box 7. At least that is my impression after I read the instructions. I don't use box 9 - so I am not sure if my interpretation is correct.
As far as paying a commission to a 1099misc sub contractor, you need to report on a 1099misc in box 7 payments that in total are $600 or more for the year.
Mary
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And if it's just a sales person woking soley for commissions
You need to be careful here. If this is a person working for your company as a salesperson even though they are paid strictly commission, you may have an employee.
I would suggest you thoroughly discuss this situation with your local CPA or other tax professional to determine what you really have- direct sales of product by an independent, a 1099 sub-contractor, or an employee. Then file the appropriate reports.
The penalties for classifying incorrectly can be severe.
