As the year comes to a close, we are thinking about presents, visiting with family, and celebrating the upcoming new year. What our team is thinking about is making sure we are prepared for the storm that is quickly approaching – 1099 Season! Our firm has successfully put together a great process that we would like to share with you in regards to this compliant related service.
Our 1099 season begins in November when we send a very simple Survey Monkey asking all of our business owners if they believe they have issued payments to vendors who will be required to issue 1099’s. This survey gives us a preview and an estimate on how many clients are returning to us for this service and also alerts us to anyone who already knows they do not need to issue 1099’s.
The next step is to issue a disclaimer letter for those businesses who either claim that they do not have any 1099’s to report or are going to be issuing the 1099’s themselves. This will eliminate any future liability to our firm for those clients.
In December, we issue an engagement letter and payment authorization form that will tell the client exactly how our process is going to work. We set a deadline for them to sign the engagement letter and to fill out and sign the payment authorization form by 12/15/2018. We let them know that if they do not complete this action that the fee for preparation services will increase by $50.00. We send these documents through RightSignature. You would be shocked at how quickly our clients signed those documents!
In that engagement letter, we spell out the deadline for submission of the 1099 information; including the recipient, recipient address, tax ID# and the amount paid in the year 2018. That deadline is January 10, 2019. The ideal scenario is that they are keeping up with the information throughout the year and receiving W-9’s from their vendors prior to making payment to them to insure that they have what they will need at year end. On a quarterly basis for our in-house bookkeeping clients, we check for new vendors and do a 1099 analysis and alert the clients that we believe they need to obtain a W-9.
The bottom line to this process is that YOU are in charge of your business. YOU let the clients know how the process is going to go and how much it will cost. The 30 days that you have to issue these required forms is not a long time. On top of year end work, getting ready for tax return preparation, ensuring that these compliance forms are filed is critical to your success. YOU be the boss, the clients will appreciate the efficiency and the transparency of your deadlines and costs and you will enjoy a successful, productive, and profitable season.
Consider using EFile4Biz for your informational compliance related filings! It’s easy, affordable, and will eliminate paper filings. Insightful Accountant has arranged for Tax Practice News readers to receive a 25% discount on efile4Biz’s print, mail and e-file services (some restrictions apply). Just use the code FWS25 at checkout. Best wishes for a successful information return season!
Author Bio: Dawn W. Brolin is a Certified Public Accountant, Certified Fraud Examiner, and CEO of Powerful Accounting, LLC, a nationally recognized accounting, tax, forensic and fraud, IRS Representation as well as a QuickBooks consulting firm. Dawn’s list of professional accomplishments is extensive and includes speaking and consulting for prestigious companies. Named “Top 25 Most Powerful Women in Accounting” 2012-2017 by CPA Practice Advisor, a “Top 10 Managing Partner Elite – Great Accounting Firm Leader” in 2017 by Accounting Today, and selected as a “Top 40 Under 40” by CPA Technology Magazine.