Unless you run H&R Block, you’re probably like me in hating tax season. But for me, it’s not the dollars that are the issue. It’s all the awful, time-consuming paperwork. And nothing is more confusing and annoying than dealing with a 1099.
There are actually several kinds of 1099 forms. There’s the 1099-A, 1099-B, 1099-C, 1099-CAP, 1099-DIV, 1099-G, 1099-H, 1099-INT, 1099-K, 1099-LTC, 1099-PATR, 1099-OID, 1099-R, 1099-S, 1099-SA, and the 1099-MISC. As a small-business owner, I receive an avalanche of these, but I also have to issue my own to people I work with. The process for dealing with both sides is no fun.
Like most small businesses, I issue mostly 1099-MISCs. I don’t think I’ve ever issued any of the others. When it comes to these 1099s, I crack open my accounting software every January and try to figure out who needs one. And every year, I need to be reminded of the rules.
There’s one that’s easy. If I paid any attorney more than 0 during the year, I have to issue a 1099-MISC. I consider it a personal victory if I don’t have to issue one of those, but inevitably there’s always at least one.
Then it gets a more complicated. If I paid 0 to anyone or any company for services or products, I need to issue a 1099-MISC — with one important exception. If a company is incorporated, then no 1099 is required. I’m not sure why, but the vision of millions of 1099-MISCs descending on a company like Staples from every little company in the world has always made me chuckle. Good thing that’s not how it works.
It does mean, of course, that I must issue 1099-MISCs to my independent contractors. And it means any partnership or LLC to which I’ve paid more than 0 needs to get one. Of course, the flip side is true as well. Since we’re officially Cranky Flier LLC, we get a flood of 1099s ourselves.
I’ve never figured out a good way to deal with that. While some are sent electronically, I get a silly number of paper 1099s via snail mail. Despite my best intentions, I somehow always end up with a folder full of 1099s from all over. I really just want to dump them off on my accountant, but I need to organize them first.
My goal this year is to scan them as they come in through the mail. Maybe I’ll do it once a week to avoid becoming a scanning fool. Once I do that, I can forward them on to my accountant so he can do what he needs to do.
It would be nice if there were an easier way to deal with all this, but so far, that doesn’t seem to be in the cards.