Category

1099

1099s review can start TODAY!

By | 1099, Cloud Accounting Option and Reviews, Procedures, Uncategorized

Counting today, we are only 79 DAYS away from the 1099s filing deadline (box 7).

Therefore, it is much better to be prepared and ready, than to wait for the deadline, which is never a good idea! 

 

So, Quickbooks Online finally opened up the review option for the current year.  Just last week we were only able to view last year’s 1099’s reports. But, as of this month, we are now able to review the current year, and get ready ahead of the time for the upcoming tax season!

To review your 1099s, Go to your Quickbooks Online (QBO) file, and navigate to (1) Expenses > (2) Vendors > (3)Prepare 1099s*

(3*) One button is housing two other options, and if you don’t see the “Prepare 1099s” option, then click on the down error next to the “Pay Bills” or “Order Checks’ and you will be able to see Prepare 1099s option*

On the very next page, you will be able to read more about the 1099s filing, deadlines, and read through FAQs. It is a very good idea to read through at least once a year:

On the next page you will be able to review the following:

  1. Name of the company, business address, and Tax ID

2. Review, add or modify accounts that are currently checked for the 1099 reporting. Here you can also make sure that the correct accounts are marked correctly ( i.e. Legal Expenses are not marked in the Nonemployee Compensation group.. etc)

3. View the list of ALL vendors and confirm that all 1099’s vendors are marked to be tracked. Also, it is a VERY GOOD IDEA to add emails for each contact as the email delivery of the 1099’s forms can be 1/10th of the cost of the snail mail delivery of the 1099’s.

Make sure you do have:

W9 from any vendor, regardless of the amount you have paid the vendor in one year!

4.  It’s now time to preview (review) the 1099s

Pay attention to:

  1. The correct year is selected!
  2. Gather the missing information for the vendors listed in red
  3. Review the amounts in boxes
  4. Review why there is a difference between the ALL PAYMENTS and the BOX (that was reported) (if any

 

Books LA is jumping on the review for all of our clients! And so should you!

We can never be too prepared.

Tips:

  • Ask for a fresh W9 every 3 years. It is always a good idea to have current W9 as the addresses, entity types or DBA names can change.
  • Obtain a W9 regardless of the amount! NO exception. Why? Besides many other reasons here are two very important ones:
    • Failure to report 1099 for the lack of W9 can result in the 28% in backup withholding, plus penalties, plus interest! That $1000.00 expense that was a good deal is now costing you $280.00 +( pen.+int%) * years!
    • Vendor received less than $600.00 this year, but the next one he receives over $600.00. A few months later it’s time to do 1099’s and the vendor is MIA. They got their money, and don’t feel its urgent to comply. What do you do? Refer to the previous bullet point, and be ready to pay!

So, GET THE W9!!!!

Happy Tax Season (almost)!

 

 

Ever wondered how much does it cost to hire an employee?

By | 1099, Procedures

We are often asked what is the difference between the Independent Contractor and em employee. Often times employers are turned off by hiring an employee due to the cost. However, engaging an independent contractor that is actually classified as an employee can we very costly and usually involves additional audit, accounting and sometimes legal fees when addressed the misclassification few year later.

 

Our partner Gusto wrote a really good article about the difference an how to classify to either a new hire or a new contract.

The main difference is :

An employee:
  • Works at a specific time and place set by you, the employer
  • Generally works for just one company
  • May receive training
  • Uses your tools or other work-related resources
  • Is subject to a large degree of control by you
  • Is generally paid a salary or hourly wage
Why does it matter? Because employees…
  • Often receive employment benefits
  • Are subject to financial deductions such as income tax and Social Security tax, among others
  • May join a union
  • Are often protected by state and federal law for overtime and employment discrimination issues
An independent contractor:
  • Can work whenever and sometimes wherever they’d like
  • Can work for multiple companies
  • Usually trains on their own
  • Uses their own tools and resources
  • Controls their own method of work
  • Is often (but not always) paid by the project or on a flat-fee basis
Why does it matter? Because contractors…
  • Do not normally receive employment benefits
  • Pay their own self-employment tax and are not subject to other withholdings
  • May not join a union
  • Generally do not receive overtime or protection for employment discrimination

 

So regardless of the cost, the businesses should always follow the rules and the law, when determining the difference.

Employee Cost Calculator by Intuit

However, if you are just wondering what would be the cost alone, here is a really cool tool that our partner Intuit created to help us along.

Employee Cost Calculator

 

 

With this tool, you can plan better, and have a very good idea how will the new hire effect your budget. But the decision if you should hire or contract out should be made solely based on the type of the relationship, and not on the cost!