National Entrepreneurs’ Month was created in 2016 to celebrate all of the hardworking Americans who forge their own path and open a business. In fact, the U.S. Census Bureau states Americans have been filing new business applications at the fastest rate since 2007. According to the Global Entrepreneurship Monitor, there are more than 31 million entrepreneurs in the United States today and 55% of adults have started at least one business during their life. A recent survey from Kabbage finds one-third of successful small businesses start with less than $5,000.
With the many responsibilities of opening a fledgling business, it is imperative to stay on top of tax deadlines. In fact, the 1099 deadline is January 31, and although you still have time to gather your W-9 forms from vendors, if you can answer YES to any of the following for NONcredit card, Debit card, or PayPal type transitions, there are some steps that need to be taken.
- Did you pay a contractor for contract labor (professional services, legal expenses, accounting services, cleaning, web services, web design, fax services) $600 or more?
- Did you pay out $600 or more in “other income” such as prizes?
- Did you pay out $600 or more in medical or health care payments?
- Did you pay out $600 or more in rent?
- Did you pay at least $10 or more in royalties?
If you answered NO to the above questions, there are no filing requirements at this time. It is best to set a reminder on your calendar to review this information again at this time next year.
If you answered YES to any of the above, you need to ensure you have a W-9 on file for all individuals or businesses that received payments per the rules above. Forms 1099- NEC, MISC, DIV, INT are due to recipients and must be filed with the IRS by January 31, 2022.
Penalties Associated with Delayed W-9 Filing
|Penalty per Form||Length of Delay|
|$50||More than 30 days late|
|$110||More than 30 days late but before August 1st|
|$270||Filing on or after August 1st|
|$550||Intentionally neglecting to file|
If you have questions about the information outlined above, our seasoned and experienced professionals are here to help. You can learn more about our Entrepreneurial Services Group by visiting our website and don’t hesitate to contact us if you need clarification on any aspect of the filing requirements.