The New Year brings your business fresh opportunities. It also demands annual compliance and information reporting. January requires your accounting department to prepare a handful of reports that affect your employees, vendors, and your friends at the IRS.
Here is a recap of the 2021 calendar year information reporting that you may be responsible for issuing soon.
Forms W-2 to Employees
Employers need to issue Forms W-2 to all employees receiving wages during the tax year. In addition, the fourth quarter and annual payroll tax returns are due. These are prepared by the person or company who processes your payroll during the year. The recipients must receive their W-2’s by January 31. The IRS requires filing by Jan 31 as well.
Forms 1099 to Vendors and Independent Contractors
Forms 1099-MISC or 1099-NEC are required for certain payments made to other individuals or companies in connection with a trade or business.
Payments made directly by credit card, through payment service providers such as Venmo, or a credit card processor such as Square, are not to be included.
Forms 1099-MISC are issued for certain payments of at least $600.
- Paid to individuals or entities not taxed as corporations, including:
- Prizes and awards
- Other income
- Paid to individuals or any entities including those taxed as corporations, including:
- Medical and healthcare payments (NOT health insurance premiums)
- Payments to an attorney
- Direct sales of at least $5,000 of consumer products for resale
- The recipients must receive the Form 1099-MISC by February 15.
- The IRS requires filing by March 1 if filed by mail, March 31 if filed electronically.
Forms 1099-NEC are issued for certain payments of at least $600, paid to individuals or entities not taxed as corporations, for services performed by non-employees with no exclusion for parts and materials.
- The recipients must receive the Form 1099-NEC February 1.
- The IRS requires filing by February 1 regardless of how delivered.
Forms 1099K are issued by credit card processors and payment service providers, such as Square and Venmo. These credit card processors and service providers are responsible for the reporting compliance. Do not report these payments on forms 1099-MISC or 1099-NEC.
Planning Opportunity: Consider paying vendors and Independent contractor by credit card or through payment service providers to reduce your business’s Form 1099 filing requirements.
Note: The IRS General Instructions for Forms 1099 compliance is 31 pages. What we have presented here is the most common uses that effect the Motorcoach Operator. We recommend that you clear the final preparation with your CPA before submitting your Forms 1099.
UMA Member Tracy Fickett, CPA, operates BUSBooks, a specialty accounting firm dedicated to the motorcoach industry. If you have a question, you can reach her at email@example.com.