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What are 1099 and W9 Tax Forms? | Track1099

hey it's patti scharf CPA and co-founder of catching clouds the leader in

e-commerce accounting today I want to talk about w9s and 1099s because those

1099s are coming up do like the end of next month and I don't want you guys to

be scrambling so I want you to get started now

all right so what is a 1099 a 1099 is kind of like a w-2 for your independent

contractors so you know how like when you're an employee for somebody else and

your employer pays you to do work and at the end of the year you get a w-2 and

you use that to prepare your income tax return same deal for independent

contractors independent contractors they're providing services to lots of

different people and they need to get 1099s from all those different companies

so that they can put it all together and report it to the IRS now the IRS

actually is using it just to make sure that the service providers are reporting

all of their income that's kind of what's going on here so but you have an

obligation as the one who is hiring somebody to provide these services you

have the obligation to report their earnings to the IRS so you need to know

how this works so who gets a 1099 so generally it's going to be service

providers so people who are providing you a service it may be your landlord

it may be your janitor it may be your graphic design person it may be your

attorney there are all kinds of different things but in general if

they're providing a service to you you should be including them on your list

but that's just one parameter the next threshold is did you pay them more than

$600 yes they're probably going to get a 1099 unless are they incorporated if

they are a corporation so like typically in their company's name it'll end

corporation or Corp or Inc that means there are corporation and they are

exempt from having to get one of these things now if they are a limited

liability company they may or may not we'll talk about that in a second and if

their sole proprietor they probably will the next parameter is did you pay them

through cash check ACH venmo if you've paid them wires if you've paid them in

one of these different methods you're going to have to send them a 10-9

if you pay them with a credit card or you pay them with PayPal

then PayPal and the credit card processor those guys are going to be

sending out the 1099s so you don't have to okay so how do you know if you're

paying somebody who is a corporation so you know whether or not you need to send

them a 1099 and the answer is you use a form called w9 all right so you need

about five different pieces of information from your service providers

to know whether or not you're gonna send them a 1099 and then if you are going to

send them one you need this form so that you know what information to include on

the 1099 and those items are named name of the person and their business if they

have a DBA you need their either social security number or their employer

identification number you need their address their email address and what

type of business they are so their entity type and now I'm gonna give you a

bonus tip you should ask for your service providers to provide you the w9

before you ever pay them because they are super excited to give you that w9 so

that they can get a check versus waiting until tax time when it occurs to them oh

wait I don't want to include this on my tax return and they want to like kind of

trick the system so if you want to make it easier on yourself remember this is

your legal responsibility to be getting this information and sending out these

forms if you want to take care of what you need to take care of do yourself a

favor and get the w9s before you pay them alright so now I'm going to talk

about the process a little bit and what we use we use a tool called track 1099

this is not a paid advertisement no affiliate fees with this or anything

like that we've been using it for I want to say six years give or take a really

long time we've been really happy the great thing about this system is you

don't really pay for the service you pay by the forum so if you file one forum

you pay for one forum filing which is amazing if you file 50 forums you pay

for 50 forms but they have a pricing scale so like the more forms you file

that it becomes perform and if you're an

accountant then like you can count up all of your different clients and total

all those forms together and it just gets cheaper and cheaper perform

okay so here's roughly how it works you set up an account on track 1099 you go

into their w9 module and you send out an email through their system to your

service provider your service provider will get an email they will fill out the

w9 so they'll include their name and address and taxpayer ID number and yada

yada they will electronically sign the form

and it'll get sent back to you when it comes back to you you will have

a list of all the people you have invited whether they need to get it to

99 or not and basically all the information you're going to need to send

out a 1099 pretty awesome instead of sending out one by one you can also

upload a list or you can actually it connects to zero it connects to

quickbooks online it connects to basically anything because you can

import a CSV into the system if you want to go that way if somebody gives you a

paper w-9 you can also go in and just like type it up and include that

information that way so you can have all of your w9s no matter how you're getting

them loaded up into your system then when it's time to file your 1099s in

january you just click transfer to the 1099 module and it will take all the

information that you have from the w-9 system move it over to the 1099 system

with all the addresses and taxpayer ID numbers and all that different stuff so

you know that if there's a typo it came from the person that you sent it to and

not from yourself which is really awesome and then you can just look in

your accounting system and you can type in the different amounts that is due to

them the other option is if you have this information loaded it like the

address and taxpayer ID number and all that stuff loaded into like zero then

you can export it from zero in to track 1099 and you can send the 1099 s that

way with all the numbers like the the amounts are already pre-populated

then once everything's in there and ready to go you just schedule them for

delivery they can be electronically sent to all the independent contractors then

you can also queue them up for a filing with the IRS after you schedule

everything with the IRS and you've sent them off to the independent contractors

the system will actually track when things have been viewed and accepted and

everything else if there are any errors then it'll get kicked back to you and

you can fix them it's just it's such a great process for keeping track of all

this stuff which it previously has always been just a nightmare to try and

keep track of all right so I've got a few links for you down below for more

information on 1099s and w9s in general i've got a link to the track 1099 system

so you can look that up and that's pretty much it I hope you try it out if

you'd like it and you look if you've used it in the past and you liked it

leave me some comments below if you decide to use it this year leave me some

comments I want to know how it went and I think that's it I hope you liked this

video if you did please like comment and share if you haven't already please

subscribe and I'll catch you later