Does your small business rely on independent contractors to do work for you on a regular basis? If so, you’re going to need to send 1099 forms out to them at the end of every year if you’ve paid them more than $600.
Independent contractors can then use these 1099 forms when filing their taxes. There is a specific section that these people will need to fill out when filing their taxes using information from a 1099 form.
There is a 1099 late filing penalty that you might be forced to face if you don’t get 1099 forms out to independent contractors on time. You should aim to avoid the penalty for not filing 1099 forms at all costs.
Here are three important things you need to know about a 1099 late filing penalty.
- Your Penalty Will Be Based on How Late You File 1099 Forms
The 1099 late filing penalty that you face will be based largely on just how late you choose to file 1099 forms.
The 1099 filing penalties for those businesses that file within 30 days of the due date are just $50 per 1099 form. But you might end up getting hit with 1099 filing penalties of up to $280 per 1099 form in a worst-case scenario.
If you only have to file a few 1099 forms, this penalty might not hurt you too much. But if you have dozens or even hundreds of 1099s to send out, it could hit you where it hurts.
- There Are Exceptions to the Penalty for Not Filing 1099 Forms On Time
Although the IRS doesn’t play around when it comes to companies filing their 1099 forms on time, they’re not completely heartless in this department. They will extend exceptions to small businesses in some instances so that they can avoid paying a 1099 late filing penalty.
For example, if your small business can prove that an event out of your control prevented you from sending out 1099 forms, you might not have to worry about paying 1099 filing penalties.
Learn more about these kinds of exceptions and seek to use them to your advantage if you can.
- An E-Filing Service for IRS 1099 Forms Is Available to Help You
If you’re concerned about getting hit with a 1099 late filing penalty, there are e-filing services for IRS 1099 forms that you can turn to for help. They’ll ensure that you aren’t late with your 1099 forms at any point.
Just make sure that you look for a reputable e-filing service that specializes in 1099 forms. You’ll feel better about dealing with your company’s 1099 forms when you have them in your corner.
Always Steer Clear of Encountering a 1099 Late Filing Penalty
If you file your company’s 1099 forms even just a little bit late, it could come back to bite you in a big way. You’re going to have to pay some kind of 1099 late filing penalty in the aftermath of your misstep.
For this reason, you should spend a little money on an e-filing service that can help you send out your 1099 forms on time. It’ll be well worth the investment on your part.
Get more small business tips in some of the other articles that have been published on our blog.