The question “Who gets a 1099?” is fundamental for business owners in the construction and trades industries. Here’s a breakdown of who should receive one:
It’s important to note that employees do not receive 1099s; they receive W-2 forms instead. This distinction is crucial for proper tax reporting and compliance.
Understanding the deadlines for 1099 forms is critical to avoid penalties. The question “When are 1099s due?” has a multi-part answer:
Missing these deadlines can result in penalties, so it’s crucial to mark these dates in your calendar and prepare well in advance.
Understanding how these tax forms work is essential for proper financial reporting. Here’s a step-by-step explanation of the process:
This process helps maintain transparency in financial transactions and ensures proper reporting of income.
While there are several types of 1099 forms, contractors and construction business owners typically deal with a few specific ones:
Before filling out these forms, you need to collect specific information from your contractors. Your subcontractors should fill out a W-9 each year:
All of your subcontractors should fill out a W-9 form before you EVER pay them. This ensures you have all the necessary information on file when it’s time to prepare. If you’d like an easy way to keep track of your subcontractors information, download our subcontractor packet here.
Failing to file 1099s or filing them incorrectly can lead to significant penalties:
These potential costs underscore the importance of timely and accurate filing.
To manage reporting effectively:
If you want our checklist to simplify collecting important information from each of your subcontractors, download our subcontractor packet and make this process easy.
Understanding tax forms is a critical skill for any contractor or business owner in the trades and construction industry. Knowing who gets one, when they’re are due, and how they work are essential pieces of knowledge that contribute to your business’s financial health and compliance.
By staying informed about subcontractor and tax requirements and implementing good record-keeping practices, you can ensure that this aspect of your business operations runs smoothly. While it may not be the most exciting part of running your business, proper tax form management is crucial for long-term success and avoiding unnecessary complications with the IRS.
Take the time to familiarize yourself with these processes, set up systems to track necessary information, and don’t hesitate to seek professional help if needed. With the right approach, managing your tax obligations can become a routine part of your business operations, allowing you to focus on what you do best in the trades and construction industry.
At work, Justice is passionate about helping the team make decisions and connections that propel the business forward. He prioritizes client satisfaction by serving as a medium to facilitate communication to the proper channels making sure every issue is properly addressed.
Outside of work, Justice enjoys exercising by going to the gym and playing pickleball with his friends. He is a self-proclaimed foodie who can’t say no to trying a new restaurant, sometimes even immediately regretting it.
At Level Accounting, Zach is responsible for bookkeeping & payroll. He is dedicated to ensuring financial success for our clients.
Beyond the office walls, Zach’s weekends are filled with adventure, whether he’s exploring Florida’s hidden gems with his wife or battling it out in tournaments. When it’s time to unwind, you’ll find him at the movies or casting his line out for a relaxing fishing session.
Meet Melanie J, one of our senior staff accountants! Melanie ensures your financial health with precision and expertise. Beyond the office, she’s a true crime enthusiast who loves traveling and outdoor adventures. Whether she’s balancing books or exploring new trails, MJ’s dedication and skill set the standard for excellence in our team.