Get ready for your year-end Employee and Contractor Wages and Payee Information Review. In just three short months, W2s and 1099s must be transmitted to employees and contractors. Keep in mind that we are entering the holiday season and contacting contractors to obtain W9s will be very difficult. You may quickly discover that not much time is left to prepare for this important task. Get Started Now!
Contractors paid directly by you require a 1099-NEC
Identify contractors you have paid $600 or more for services performed for your company or sub-contracted to be performed on your company’s behalf for jobs in 2021. The payments made to contactors include payments from all sources; Company Check or ACH, Credit Card, Venmo or PayPal.
Ensure each individual contractor or sub-contracted company you’ve contracted has provided you with a fully completed W9 form. Your company or accountant will need the information specified on the W9 to determine if the paid contractor will need to be issued a 1099 by your company in January 2022.
Contractors are notoriously slow at responding to W9 requests; it is imperative that you identify who your contractors were and that you have a completed W9 on file by November 30th.
- On November 8th, prepare a contact list of all your contractors, the list should have the name of the primary contact with phone number and email address.
- Notate if you have a valid W9 on file; If no W9 is on file, send a high priority request to your contact to provide a completed W9 form ASAP. Send a fillable W9 form in your email in case they do not have one handy to send back.
- Follow-up every other day until you receive the W9 and update your list.
- Your goal is to obtain all missing W9s by November 30th.
Submit a copy of all your contractor’s W9 to the service provider who will issue the 1099s on your behalf. If you do not currently have a preferred service provider for this task, contact us, we will be happy to issue the 1099s on your behalf.
Payments to your Landlord for Business Rents or an Attorney for Business Legal Services require a 1099-MISC
Identify all payments made to your Landlord for Office or other Business Rent and complete a 1099-MISC and include the payments in Box 1, Rents. Payments made to a Law Firm for Business Legal Services are reported on Form 1099-MISC in Box 10, Gross Proceeds Paid to an Attorney.
Employees and Contractors paid Via Payroll Service
Access & Review Your Employee Details Report
Verify employees have entered the correct name, address, and Social Security number required to correctly generate their W2 or 1099-NEC. Common reasons for errors related to this information include a name change due to marital status or other reasons, a recent move, or an incorrect Social Security number. Access the Employee Profile in your Payroll Account to make any necessary update to employee information.
Review Your Year-to-date Report
Confirm the accuracy of employee wage amounts to date by checking for deduction changes, handwritten checks, voided checks or other compensation, including an auto allowance, per diem or other fringe benefits.
Depending on the check date needed, you may be able to process a future extra payroll with the updates or for check dates in a prior quarter, you will need contact your payroll provider to request those updates.
1099-NEC via Next Step Payroll service
1099-NECs for Contractors paid via our payroll service will be processed by our service and available for download online by the mandatory date.
If you prefer to file those on your own or via a third party for 2021, be sure to opt out before December 1st. If you do not opt out, our service will process the 1099-NEC/1096 filings on your behalf.
This may be preferable if:
- You had contractors that were NOT paid via the payroll service.
- A contractor was paid via the payroll service AND received payments directly by check (not via payroll service).
If this is your situation, contact us; we will be happy to issue all 1099s required on your behalf.
Please contact David at (512) 580-4621 to discuss how Next Step Payroll LLC can ease the burden of year-end W2s and 1099s.