Preparing your 1099s – Deadlines and Process

By Patrick Bonnaure, founder of ProLedge Bookkeeping Services

There are many options available for preparing, sending and filing 1099 forms. They range from Do-It-Yourself to complete outsourcing options. However, all options have a common starting point: your QuickBooks file needs to be up-to-date through the end of 2011 and you need to have the proper information about your vendors on file.

What is the deadline to submit 1099-MISC forms? Check with your CPA or the IRS for your specific case, but the published deadlines are that the 1099-MISC forms need to be sent to some of your vendors by January 31. They also need to be filed with the IRS by February 28 if you are filing by mail or April 2 if you are e-filing.

Of all tax forms, 1099s are among the easiest to prepare and file yourself (see 1099 instructions from the IRS), but if you need help, here are some typical options:

Before you chose an option, make sure to take a serious look at these online services. They are not the right option for someone who wants zero involvement in the process, but if you are willing to roll up your sleeves a bit, they are an extremely convenient option, because they will take care of mailing the forms to the vendors and e-filing with the IRS. It’s a competitive market, so the pricing is very reasonable: typically under $3 per 1099.

Remember that the 1099 process can only start once your QuickBooks file is ready for it. You won’t know how much you paid your various vendors until all the 2011 data is in QuickBooks. You don’t necessarily have to “close” your 2011 books to be ready, but at the very least, all accounts should be reconciled through the end of 2011.

Once your accounts have been reconciled, there are a few more steps required to make your QuickBooks file primed for 1099s:

  • You will need to map the various accounts of the chart of account to the proper boxes of the 1099 form.
  • Check that you don’t have duplicated vendor names. It often happens that you have the same vendor listed multiple times with different spelling. If you paid Joe Consultant $1,000 in 2011, he might need to receive a 1099, but if your QuickBooks file is showing “Joe Consultant” as having been paid $550 and “Joe Consult” (different spelling) $450, neither will make the threshold and Joe Consultant won’t show up in your 1099 report.
  •  Check that you don’t have vendors hidden outside of the Vendor Center. Sometimes vendors can be recorded by mistake as “Other Names” or “Customer”. Sometimes, a vendor might just be listed in the memo field of a transaction, but not as the beneficiary of the payment. In all these cases, the vendor won’t come up in a 1099 report. It needs to be adjusted.

Once this QuickBooks cleanup has been completed, you need to make an inventory of the information that you have for each of the vendors that should receive a 1099. Do you have a W9? Do you have the correct social security number or EIN? Is the address current? Even if you want to delegate the 1099 work, the responsibility of having the proper records for the vendors remain yours.

At that point, you are ready to prepare the 1099s and all the options listed above become available to you, ranging from filling in, mailing and filing the forms yourself to delegating the whole process.

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