Creating a Small Business 1099 tracking sheet for your 1099s will make your process easier at the beginning of the year for the prior year. This week, we are sharing how to create this tracking sheet to add to your small business end of year tasks.
First, have a software application and track the vendors. Place all the Nonemployee Compensation recipients in a vendor account for 1099-NEC. And, all the other 1099-MISC recipients in a vendor account for 1099-MISC. Your tracking software may already do this for you. This will make it easy at the end of the year to find all the accounts for each person and how much they made.
Some applications may have the new form embedded in their software. But, others may not. If you want to keep it separate, track the names of the people in a separate spreadsheet. Sort the report by account or by payee so you can easily determine the amount for the entire year. This information is easy to collect when you use an application like Quicken or QuickBooks.
But, what about the process of making sure the right people get the right 1099?
How to Create an Easy Small Business 1099 Tracking Sheet
This post offers you a checklist that will make sure you don’t miss anything.
Follow these steps below to create a customized small business 1099 Checklist.
Pull last year’s 1099s and 1096 completed form for reference. We like to keep these handy just in case we need to reference data or any issues that happened the prior year.
Order the current year 1099-NEC, 1099-MISC, and 1096 forms in August/September
In August and September, order copies of 1099-Misc, 1099-NEC, and 1096 forms from IRS website. This section should be added to the checklist as a reminder so you remember to do this task earlier in the year.
Get totals together for each recipient
If there is no software available to use, buy 1099s generator software with CD from Office Supply Store and forms for _______ year if needed.
Add up all the income for each Nonemployee Compensation Workers and other 1099-misc recipients (write each person name and their total next to their name).
Determine who needs the 1099-misc and a 1099-NEC. Any subcontractors who make more than $600.00 in the year will get either one of these 1099s.
Inform recipients of their total for the year via email to have them confirm the amount.
In December, inform all Nonemployee Compensation Workers the amount each of them made this year. We like to do this so they can also confirm the number before we spend the time and generate the 1099s.
After they confirmed the totals, check off their name and when they responded as a reminder that they saw the total.
This is a good time to check and make sure you have W-9 forms for each Nonemployee Compensation Workers in their appropriate files. When you have new subcontractors or vendors, this information should be complete and placed in each person’s file and stored in a safe place.
After you reconcile the bank account in January, print out 1099-MISC and 1099-NEC for each vendor that made over $600.00 for the year and mail to vendor by 15th of January. Add this to your checklist as a reminder.
List the names of the Nonemployee Compensation workers and their previous year total. If the subcontractor was around the previous year, make sure you have the W-9 form in the office files. And add the date that you mailed the 1099-NEC form.
Add 1099-misc recipients to your tracking sheet.
Now, it is time to do the 1099-MISC vendors to your tracking sheet. Write their legal names, the amount they received, and when you mailed the 1099-Misc.
Give them a few weeks to review and get back to you. Write a note and include it with the informational form. State something like Dear __________: Please let me know by _____________(date) if there is a discrepancy in your total amount, legal name, TIN #, or anything else. Otherwise, we will be sending this one to the IRS. Sincerely, __________(business owner).
Write the mail out date on the tracking sheet for each person.
When you mail the 1099-NEC and the 1099-MISC, write the date you mailed each form on the tracking sheet.
After the two week grace period, write down the total for 1099-NEC forms you sent out and how many 1099-MISC forms you sent out. Then add them together and add them to the 1096 form with your company’s information. Sign and date and send it to the IRS. This task needs to be completed by the end of January.
Write down on the tracking sheet when you mailed it to the Federal and State.
Pennsylvania wants a copy of the PA Dept. of Revenue recipients either mailed to them or upload to their website through your Department of Revenue login account. Mark the date you did this task. It has to be completed by the last day of January. If you are from another state, you will need to check on your state’s Department of Revenue for information.
Well, that is it. Place these 1099/1096 files and the tracking form in a safe place and hold on to them indefinitely. It’s important to keep them safe because there is private information on them. I hope this helps you create your company’s very own customized small business 1099 tracking form.
Visit this post How Long Should I Keep Business Records to help you determine how long you need to keep your paper files.
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