You do not want more employees. And why should you hire more people? It is expensive. You have to brush them up from scratch: training to benefits.
But in this fast-paced world, it is time to outsource some work. But when the tax season arrives, what do you do?
In this blog, we shall understand how to 1099 someone and everything about it. If you want to create pay stubs online, you should visit Online Paystub, a free tool.
What is a 1099-MISC?
This is a form which means miscellaneous income. You will send it out to any independent contractors who did business with you last year. It is the counterpart of a W-2 form for some outsourced work.
You have until 31st January to complete these forms and send them out. If you do not meet this deadline, it will cost you anywhere from $30-100 per form.
Step 1: Check Your Information: Ensure your current name, address and social security number are on file for your independent contractors. This information should have been collected via a W-9 form. If you don’t have this information on the file, the IRS allows you to withhold 28% of the person’s pay.
When trying to figure out how to 1099 someone, you might wonder if there are any exceptions.
Step 2: Grab Your Forms: Unfortunately, you cannot download these. You have to either order them from the IRS or you will have to pick them up personally at an office supply store. Another option: Accounting Software has these forms included.
Step 3: Fill Out The Forms: These forms are printed threefold. You will send Copy A to the IRS, Copy B to independent contractors, and Copy C to keep for yourself as a record. You shall start with your information. This shall be your social security number if you are a sole proprietor.
You will work your way down, filling out your information and then the information of the contractor who has worked for you. Enter the whole money paid to the person and any withholdings as well.
Step 4: Mailing Out: After you have completed and mailed all of the 1099-MISC form, the next step is to mail a 1096 to the IRS. This form outlines the total amount of money spent on all of your independent contractors. You have until the last days of February to get this done.
If you are looking for free check stubs online, you should check Online Paystub, which is a 100% free tool to use to generate check stubs in a minute. No doubt this task of doing 1099 someone is a challenging task, but it’s requirements, and you will need to get it together with your accountants so that they can make the process smooth and easy.