If you are a small business and paid at least $600 to a person or an incorporated business, you must issue a 1099-MISC form. Most small businesses easily meet the $600 threshold because they have to pay vendors for goods or services purchased during their normal course of business.
Form 1099-MISC must be sent to your contractors by January 31st for the prior year in which payments were made. In addition, you will need to file Form 1096 with the IRS by March 31st.
You can check out the detailed IRS Form 1099-MISC Instructions on the IRS website.
Failure to file or filing the Form-1099 late will result in penalties of $30 to $250 for each form.
When you hire an independent contractor or a vendor, ask them to fill out a W-9 form. This will allow you to get their Tax ID and mailing address. It also avoids last-minute stress of having to find out this information when you are getting ready to issue their Form 1099.
If you use a CPA for your business, he or she will be able to generate form 1099 for your contractors and take care of the necessary filings with the IRS. But I have always generated Form 1099 myself. It’s not very complicated but I have to say that the IRS could have made the process a lot simpler than it is.
How To Generate And Mail Your Own Form 1099-MISC
Order blank 1099 forms for free from the IRS
You can order blank forms from the IRS order page. It takes about 2-3 weeks to get your forms in the mail, so plan accordingly. You will need to get both Form 1099 and Form 1096. Once you get the forms, you can fill it out and mail Form 1099 to your contractors. This option does not cost anything but know that it could take you a couple of weeks to issue the forms.
Order blank 1099 forms online or from an office supply store.
You can order the 1099 forms from Amazon or an office supply store, which you can then fill out and mail. Top-selling Amazon 1099-MISC kits can be found as little at $12 to $15.
Use an online service to fill out the information and generate a PDF
There are several online services that allow you to fill out information and print or create a PDF of Form 1099. The popular one is the one from Intuit. It costs around $14.99 for 3 forms. Additional forms are $4.
Wagefiling.com also offers a similar service. It costs $3.49 per form.
Efile4biz.com allows you print Form 1099 for $4.50 per form
Use tax prep software for business
You can easily generate Form 1099 from tax software for businesses such as TurboTax Business. TurboTax Business is intuitive to use and will generate not only Form 1099 but also other tax forms such as W-2. There is no limit to the number of forms you can generate.
Running a business is stressful. But generating Form 1099 to stay on the good side of the IRS shouldn’t be too difficult. Though there are free options, if you are willing to shell out $10 to $15, you can generate Form 1099 for your contractors in no time.