Tag: accounting

The 1099: How and When To Send?

1099’s can be a bit overwhelming for business owners. When do I send them, at what time of year, how and to who? It is easier than you think. These tips may help.

Who requires a 1099?

A basic rule of thumb is you must issue a 1099-Misc to each person you have paid $600 to in rents, services (including parts and materials), prizes and awards or other income payments. 1099 is not used for personal purposes. Businesses are required to issue 1099-Misc for payments it made and this will be sent to a sole prop., LLC, or LLP, or Estate. You will see why I didn’t include a corporation.

What are the penalties for not sending them?

Do you really want to find out? The penalties can range from $30-$100 per form depending on how long past the deadline you go. If the business were to intentionally disregard, this is a $250 fine per statement with no maximum. Do yourself a favor and get them out.

What are the expectations?

The list is a long one, but you wont need to send them to sellers of merchandise, freight, and, storage. If you make rent payments to real estate agents, there is no 1099 required. You also don’t have to send them to corporations.

Why the W-9 is important

Business owners should always, always, always get a W-9 from the vendor even if they don’t pay over $600. The vendor will have the Tax ID and address on their W-9 for easy tracking. Something else on the W-9 is the vendors company formation.

What are the deadlines?

Just like your W-2 employees, 1099 must be mailed out by January 31. You also have a 1096 transmittal form due February 28. The 1099 may also be applicable to state filing, check with your state.

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8 summertime to-dos for tax practices

I think business owners including tax Practitioners should always stay busy no matter the season. Everyone wants more money, but wants to skedaddle off to Disneyland as soon as it’s July 1 12:00am. I found a post from Roger Russell that has some great tips.

“April 15 is past, and September 15 and October 15 are comfortably far ahead, which means there are no immediate deadlines for tax practitioners to pay attention to – leaving them, perhaps, with some time on their hands.

While a long, slow summer of leaving early and closing on Fridays may sound nice, it’s probably wise to devote at least some of that downtime to fine-tune some aspects of your practice.

Stephen Mankowski, owner of Mankowski Associates CPA LLC and immediate past president of the National Conference of CPA Practitioners, has put together a list of the primary objectives that many of NCCPAP’s members — including himself — aim to address at this time of year.

1. Continuing education

Rather than wait until the end of the year or the end of the reporting period, now is a good time for all staff members — not just owners — to catch up on their requirements, and to fill in any gaps in their knowledge or improve any areas of weakness.

2. Firm operations

Monkey Business Images Smart firms hold staff meetings to assess and review the prior tax season to prepare for the next, and to determine their off-season game plan. In particularly, they review their staffing levels to see if they had enough staff during busy season, and if they have enough for the balance of the year.

3. Technology: Hardware

Fotolia Tax practices should check their servers — reviewing the systems and performing any needed updates (and possibly consider going to the cloud — see No. 5).

They should also review the performance of their desktop and laptop computers to see if they performed as expected, and if any need to be replaced. Finally, from a hardware perspective, firms should consider how many monitors staff are working with — two is rapidly becoming industry-standard, and some are moving to three, or even more.

4. Technology: Software

Now is a good time to perform needed program and system upgrades and updates, and to check on the firm’s level of cybersecurity.

Perhaps most important, firms should evaluate their tax software in terms of performance, price, support, security and more; vendors are ready to offer demos (and possibly discounts) to those who are considering a switch to a new tax software provider.

5. Consider the cloud

For those practices that haven’t made the shift to cloud-based systems and software, now is a good time to give it some thought.

Among the pros, according to Mankowski, are added data security; the ability to access data and systems from any place with an internet connection; automatic updates; potential savings from not having to buy a server or manage the firm’s IT; and automatic data backups.

Among the cons that he identified are the need to have an internet connection to access data; the relative quality of the practice’s internet connection; the speed on any given device; and the nature of the expense.

6. The office

Bloomberg News With fluctuating staff levels from busy season to the off season, it’s worth looking at whether the practice is utilizing its space effectively. Is there enough space during busy season without excess during the slow season?

7. Extensions

Due dates won’t stay comfortably far away forever, so it’s best to stay on top of extensions to avoid a time crunch come September and October. Keep an eye on outstanding source documents and other information you need from clients, and begin sketching out how you’ll manage the work that’s coming.

8. Recharge the batteries

PaulMaguire It’s not all about housekeeping and improvements to practice: Practitioners should also play lots of golf (or pursue whatever other healthy pastime works for them), take much-needed vacations, and spend time with family and friends.”

Original post from: https://www.accountingtoday.com/list/8-summertime-to-dos-for-tax-practices