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How Do I Process a 1099 Form?

How Do I Process 1099 Forms (even though I don’t really want to)?

  1. Get a W9 from your vendors and make sure they fill it out completely. This form will tell you:
    • The Vendor’s Legal Business Name
    • The Vendor’s Tax ID number (also known as EIN, FEIN, SSN)
    • The Vendor’s Mailing Address
    • The type of business (see what types are exempt below)
    • The signature of the owner/manager
  2. Run a report in your accounting software to figure out how much you paid each vendor last year. The “Expenses by Vendor” report in QuickBooks might work, but you’ll have to make sure that report doesn’t include any payments for reimbursements or products. That report can miss payments made to vendors that ended up on the balance sheet, like Leasehold Improvement (the remodel you did of your office) payments. In QuickBooks, you can run a transaction report by vendor name that should give you all payments to a particular vendor, but you may have to search around to get a comprehensive report.
  3. Use a software service like www.efilemyforms.com to help you mail these to vendors and file them electronically. Don’t be tempted to do it manually — you will spend all afternoon trying to figure out how to align the paper in your printer correctly, and then end up with a nightmare of papers on your desk trying to collate the triplicate copies. It isn’t worth it to do them by hand!

Why is it So Hard to Get My Vendor to Send Me the W9 Form?

People are busy, and most of the people you are requesting this W9 from are small business owners who have 12 million other things to do today. They aren’t particularly motivated to help you if it doesn’t get something checked off of their task list or put more money in their pockets.

Tips:

  • You are at their mercy, so be nice, and act like it. “I am so sorry I didn’t get this earlier in the year. I know you are really busy, but I have to get this taken care of this week, and you are the last person on my list.” (“Last person on my list” also tells them, I have no one else to call, so I will be harassing you every day until you give me what I need).
  • They are legally required to provide the information, so you can be a little assertive (but be nice about it). “The IRS is imposing fines on both the payer (me) and the payee (vendor), if I don’t have your information correct on the form, so I want to make sure we both avoid any government penalties.”
  • You are going to hate me for this one, because I know you are likely reading this in January at the very last minute, but I have to say it. Be proactive. When you get that first invoice from a vendor, let them know you can pay it, “Just as soon as we receive that completed W9 form.” If you don’t catch that first invoice, set reminders to pull the “Expenses by Vendor” report from your accounting system (watch out for those items that ended up on the balance sheet – see above). Send these emails to vendors quarterly or monthly instead of waiting until January and driving yourself and everyone else crazy.

Where Do I Find the W9 Form?

Google it – Just type in “Form W9” into Google, yahoo, Bing , or whatever you use to search the web. Use the PDF off of the IRS website! It should be one of the first items listed in the search results.

Good Luck!

Disclaimer – This is not legal advice, as I am not a lawyer. This is not accounting advice. This is not advice. This information is intended to help small business owners, their bookkeepers, and other related parties decode the mysteries of the small business universe. Use it to help you talk to your CPA/Vendor/Bookkeeper/Lawyer, and confirm what is required/right for your business. Information is power, but don’t try to do it all on your own, because so many people who do end up getting into legal trouble down the road. Use this information to have an intelligent discussion with the people you pay to help you manage these things. You be the brilliant Interior Designer, Chocolate Maker, Insurance Claims Adjuster, Electrician, Restaurant Owner, Optometrist or whatever it is that you do best, and leave the boring stuff to us nerds.