In addition to income tax filings, sales tax filings, and payroll tax filings, businesses need to also file annual 1099’s. Generally, a 1099-MISC is an information report that needs to be prepared by a business when they spend $600 or more on services from a non-employee. For example, if you are a contractor and you pay $600 or more to a subcontractor that does not own a corporation, you will need to issue him a 1099 at the end of the year.
Depending upon how many subcontractors you compensate, if any, you may not have to prepare and issue that many 1099’s during any given year. It may not be much of a burden, except for the new changes due to the Patient Protection and Affordable Care Act . . .
After December 31, 2011 business will have to report all payments totaling $600 or more to any vendor during the year, with almost no exceptions. If you go to the same gas station to fill up your tank, you will need to issue a 1099. Purchase supplies from Staples? Have a telephone and a cell phone bill? Take clients to the same restaurant often? Business owners will also need to obtain the taxpayer identification number of all of their vendors, along with their address to comply with the new regulations.
The main reason for these changes is because the federal government is trying to increase compliance with the tax laws by having businesses report all income that is received. But these reporting requirements are still being clarified by the IRS, and the obvious result of these changes is an increased time and expense burden to small business owners.
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