There is a big ol’ tax deadline just looming around the corner. And it’s one that you need to prepare for a little bit. It’s the 1099 deadline.
Proper W9 preparation requires complete 1099’s from your subcontractors.
Never heard of a 1099? It’s a tax form you file with the Federal Government (and sometimes your state government too) to report money you paid to a business or a person who provided you services.
By January 31st you must issue 1099s to all of your freelancers and subcontractors who performed work for you that you paid $600 or more.
BUT – and here is where preparation is key – you can only do file the 1099 if you have their tax information – including their name, mailing address, and social security number or tax id.
The most common way to do this is to have your vendors complete a W9 form .
Here is Good Cents’ best bookkeeping tip – collect the W9 BEFORE you issue payment.
Vendors are more likely to promptly submit a W9 to you if they know their payment is dependent upon it. You’ll notice in general people are a little less eager to send you this information if you have already completed your business relationship or transaction.
If you are missing tax information for your vendors, it’s wise to collect that information now BEFORE the holidays, before tax season starts, and well in advance of the 1099 deadline.
If you are confused about 1099s, you can read all about them here.