Question on new business, sending 1099's etc...HELP!?

Question

We just started a home improvement business. My husband goes out and sells windows, doors, siding, room additions etc...We pay someone to install all these things, in some cases we have to pay an electrician or roofer or ac person etc...Do I have to have an EIN number? DO I have to send out 1099's? I just planned on filing my taxes like I do my avon business as self employed (I know there are taxes involved) and using my deductions and everything. I just am unsure what to do about the people I pay for there services. Any advice would be helpful!

Answer 1

Here is some information from the IRS. Please feel free to contact me for any additional help.



It is critical that you, the employer, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.



Form 1099-MISC is most commonly used by payers to report payments made in the course of a trade or business to others for services.



If you paid someone who is not your employee, such as a subcontractor, attorney or accountant $600 or more for services provided during the year, a Form 1099-MISC needs to be completed, and a copy of 1099-MISC must be provided to the independent contractor by January 31of the year following payment. You must also send a copy of this form to the IRS by February 28 (although the form does not have to be sent to the IRS until March 31 if the business files the 1099s electronically, using the FIRE system).



Also note that independent contractors may have their own employees or may hire other independent contractors (subcontractors). In either case, they should be aware of their tax responsibilities, including filing and reporting requirements, for these workers.



The IRS has a great site with lots of information on the 1099

http://www.irs.gov/businesses/small/article/0,,id=179114,00.html

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

http://www.irs.gov/faqs/faq4-3.html



Good luck and I hope this information helped you. Contact me if you need more help.

Answer 2

You do not file 1099's for businesses that are incorporated or legal partnerships. Only for self employed individuals. You need to have everyone you pay fill out a W-9 form (download it from the IRS.GOV web site. The W-9 is the form they use to tell you what THEIR tax ID number, legal name and address are.



Filing 1099's is a real pain in the a**, but you can do it if there are not too many. There are some inexpensive programs that do a reasonably good job of producing them. Order the required forms from the IRS now so you have them ready for filing by January 31, 2009.



If there are not too many, order the IRS forms and fill them out by hand. That's quicker than driving to Staples, buying some program, installing the program, testing the print alignment, keying in the information, etc., etc.



IRS regulations say that if you should file a 1099 but do not, your deduction for the amount you pay these people will be disallowed.



Don't be a chump. (I know you are going to do the right thing. That comment is for the many people who think they're doing their workers a "favor" by not filing th e1099.)



It's either you or them that pays. File the 1099 and let them pay their proper taxes.



Download the instruction booklet for 1099 and 1096 (the 1096 is the form that reports the total of all the 1099's) from the IRS web site and read through it. It's not too bad. .

Answer 3

first thing is you should have W9's on hand for everyone you engage. these are available on www.irs.gov (click forms and publications)

it's like a W4 for business or contractors.



yes, you will definitely need to file 1099's to the contractors you used throughout the year. here's the little irs catch: you should file a 1099 for every dollar you pay out; but you must file for all payments of $600 or more. what that means is filing for $600 or more will keep you legal, but if you get audited they will request 1099's for all payments.



you 'll also need file for an EIN: the irs website is full of information.

click on the "Businesses" tab on the menu bar and the info on EIN's is about center on the page.



hope this is helpful.

Answer 4

Yes, you need EIN's on these peeps, and yes you'll need to file 1099's on any that you pay $600 or more during the year.

Answer 5

you definitely need to issue 10999's IF the subcontractors are not incorporated - DO NOT PAY them until they fill out a W-9 for with their name, address and Federal ID/Soc Sec # on it - get a w-9 from EVERYONE who you pay to do work - just to be safe. -and all those subcontractors should also give you copies of their Certificate of Insurance to prove they are covered for insurance or YOU could get sued if something goes wrong. In an industry like Construction - you should be incorporated to protect your personal assets

Answer 6

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