Who gets a 1099?
what criteria is used to determine who should be receiving a 1099
what criteria is used to determine who should be receiving a 1099
Are they an individual, not a corporation?
Did you pay them $600 or more?
Just some added thoughts:
An LLC that is taxed as a corporation does not get a 1099.
S-Corps and C-Corps do not get 1099's
LLC's that are taxed as sole proprietors or partnerships do get 1099's.
Individuals, including owners, who receive rent from the business get 1099'd - hits Box #1 (Rents)
This is the standard practice that the CPA's I work for use.
Also, beware about the $600 minimum. . .this is for Non-employee compensation. Other fields, such as 'fishing boat proceeds' have no minimum. Be sure you know what you need to 1099 for and what the particulars are.
Hope this helps,
PS Please disregard the previous post from john_eis. . .it is SPAM and not to be respected (my opinion)
I believe that ALL LLC receives a 1099. Some that are taxed as a corporation is only being TAXed as a corporation. All LLC receives 1099 from my understanding.
To Laura D and Laura K,
For years I did NOT send 1099s to LLC Corps, but was told by a CPA Firm in 2011 that I needed to. So beginning in 2011, I send one to all LLCs. From my understanding, it doesn't hurt if you send a 1099 to someone that doesn't need one, but there are repercussions if you don't send one to someone that was suppose to get one.
Maybe that is just the 'safe' approach so that you don't have to ask if it is taxed as a corp or not. . .
The CPA's I work with say that you don't have to 1099 an LLC that is taxed as a corp. . .but I don't think there is any harm in doing so.
My thoughts at the moment,
We're an LLC who is taxed as a partnership, and when I asked our accountants if I need to keep 1099s I was getting in the mail, they said "no" I can dispose of them which seems strange given what you say...they could be wrong.
I keep the forms with the tax return info, but that is just me - they dont take up much room. I'm not a CPA, but what I do is add up all the 1099s and make sure the combined 1099 total does not exceed what I show as my total income. Documentation other than 1099 info is back up of what actual gross income was - the key is to make sure no one else made a mistake and "overstated" your income to the IRS. (If so, you need to contact the party that made the error & have them correct it.) If income tax was ever withheld on a 1099 I would keep it with the tax return for sure as my proof that somewhere, someone had paid the tax. This is my personal preference.
Perhaps the question to ask your CPA firm is if they know of any circumstances when a business should absolutely keep a 1099?
Don't forget that you must do 1099s for any attorneys to whom you paid more than $600 -- also considered Nonemployee Comp.
It depends on the situation as to who should receive a 1099. There are numerous rules and regulations with regard to the types of income that should be reported on 1099s.
If you pay legal fees (to a lawyer or a law firm), you are supposed to issue a 1099 to the lawyer (or law firm), no matter how much you paid in legal fees. It does not matter whether the lawyer (or law firm) is incorporated or not. You are supposed to issue a 1099 for any and all legal fees paid to lawyers and/or law firms.
If you paid rent to a company (or an individual) wherein the company (or individual) is not incorporated, that company (or individual) should receive a 1099 for all rents you paid to them.
If you paid any company or individual over $600 as a non-employee (i.e., a sub-contractor or outside vendor), this company or individual should receive a 1099. If you are not sure whether the individual or company is incorporated, it is best to be on the safe side - issue a 1099.
If an individual is an independent sales rep for your company, and that individual sells $5,000 or more (gross sales), you are required to issue a 1099 to that individual. (An example would be someone who sells AVON products as an Independent AVON Sales Rep - your AVON lady - and this individual sells $5,000 or more, they get a 1099 from AVON.)
If you are a publishing company (who publishes books, or other types of products wherein someone receives royalties), that person who received royalties should get a 1099.
If you need further assistance with this issue, please feel free to contact me offline at firstname.lastname@example.org.
I hope this helps to clear up some of your questions.
Ken Reid, ATP, CPP
MasterType Accounting & Business Services, P.C.
You are required to issue 1099s to attorneys no matter what amount was paid. There is no miminum threshhold for payments made to attorneys.
And, to continue the list, if someone receives proceeds from a commercial fishing vessel (as in a crew member), then are to be 1099'd (no minimum)
There is a specific box for this on the 1099 Misc.
This is so great to consolidate all the details of this. . .
WOW! Great information, folks...Thanks!
Now that I know for sure who gets a 1099, how do you actually issue/generate one in QB?
I have the individual contractor set for 1099.
They don't give me an invoice, I pay them via check weekly
All checks are in the check register.
It is above $600.00
Yet when I go to generate a 1099 for last year, it says that no vendor has earned enough for a 1099.
Thanks in advance.
Edited to add:
Is it possible that I have categorized it incorrectly?
It is in the account "other expenses"
you need to go to Edit>Preferences and highlight Tax:1099 on the left. On the right, enter the account you post the vendors checks to next to the appropriate 1099 box. Usually nonemployee compensation. This will tell QB to issue a 1099 to the vendor only for checks posted to this account.
Hi I have been using the QB for over 6 months, and my question is, for the Independent Contractors such as Real Estate Agents, in QB do we put them as Vendors or Employees?
Anyone you pay for contract services should be a vendor. If you plan to prepare a 1099 for them at the end of the year, they must be a vendor.
I have a promotional products business set up as a sole proprietor. Most of the bill is for sale of a product, but there is also a setup charge for some customers because I do some of the printing myself and don't act as strictly a distributor. Is there a separate $600 limit for the setup fees and a $5000 limit for sales of products or do I just have the $5000 limit since everything involves a sale of product?
I'm a bookkeeper for a Real Estate Investor who has 3 companies, all are LLC. Besides myself there are is only one other employee. Right now he is paying us as 1099, but after talking to a CPA so that i could figure out how much a month i need to set aside for taxes for the end of the year I learned that that this is not right. That Full time employee's are to but on a regular Payroll basis is this correct? I want to make sure before I confront my boss.
Welcome to the community!
You are probably correct. Here's an IRS article that describes the differences between contractors and employees.
I hope this helps...Steve
that is actually not correct!
payments to attorney have to be more than 600.00
per IRS instruction on their website
look at instructions for 1099 misc.