When it comes to tax compliance, companies are responsible for a range of documentation every year. One of these documentation requirements is Form-1099 for independent contractors. With an increased reliance on contractors, these 1099 filing needs will continue to grow.
At Compass East, our 1099 management services ensure your company is compliant every step of the way. Offload these filing responsibilities to us and enjoy saved time leading up to tax deadlines.
The Challenges of 1099 Compliance
Many companies work with various independent contractors throughout the year to meet their needs, whether they’re partnering with freelance graphic designers or marketing consultants. These contractors may be essential to a company’s success, but they need a 1099 form for their taxes, something for which your company is responsible.
W-2 forms involve all the workers on your payroll and any tax deductions you make on their behalf. A 1099 form acknowledges a payment you made to a contractor for their services and does not include any tax deductions. Why does this get complicated?
These 1099 forms are required for any contractor who received $600 or more for their work over the course of the year. If you work with several contractors in a tax year, these 1099 compliance requirements can add up, which means you pile this administrative work on top of W-2 forms and other documentation requiring completion by January 31.
If your payroll department is smaller, adding the 1099 deadline to the list of tasks can lead to mistakes and the potential for noncompliance. With 1099 filing services, you can outsource these responsibilities.
1099-MISC vs. 1099-NEC
Within the complexities of W-2s and 1099s, you may have to confront two different 1099 forms for nonemployees, and it’s essential to distinguish the two. A 1099-MISC form is designated for any nonemployee who receives over $600 for a range of categories, including rent, awards and attorney payments. For example, if you paid rent for your office space, that payment requires a 1099-MISC.
The 1099-NEC is for nonemployee compensation. If you hired an independent contractor to help you complete a task, like design your website, and you paid them at least $600, they need a 1099-NEC. This form will allow the contractor to file self-employment taxes and report their income at the end of the tax year.
You likely encounter both of these 1099 types for various nonemployees. With support from Compass East, you can handle 1099 reporting requirements with ease.
About Our 1099 Filing Services
Businesses have several tax deadlines to think about on January 31, including completed W-2s and 1099s. If you have an extensive employee network and rely on contractors throughout the year, this paperwork can add up. At Compass East, our 1099 management services allow you to outsource a portion of these responsibilities to us.
Working with an independent contractor requires several processes throughout the year, including W-9 forms and work schedules. Our outsourced 1099 management services involve keeping up with these procedures as you hire nonemployee workers. When the 1099 deadline approaches, we’ll fill out the forms based on payroll data and send them to contractors.
Our filing services include:
- Collecting W-9 forms from contractors for ID requirements.
- Tracking time worked and payments accrued.
- Reviewing 1099 materials to ensure accuracy.
- Printing and mailing documents to contractors.
Compliance is essential for minimizing the risk of tax audits or tax-related penalties. Our team handles every step of 1099 compliance reporting so you can focus on other tax deadlines.
The Advantages of Our Outsourced 1099 Compliance Reporting Services
Outsourcing your 1099 reporting to Compass East can help you:
- Reduce risk: Tax penalties are expenses your business isn’t prepared for. Outsourcing your 1099 filing needs to us can help you reduce the risk of noncompliance and keep your company in a good financial state for the next fiscal year.
- Save time: If you work with many independent contractors, your paperwork will add up each year. Counting on your team to handle payroll concerns with a mounting workload requires a lot of company time that you may not have. When we handle 1099 management, you save time and reduce the strain on your team.
- Continue contracting: When your company relies on contractors but struggles to keep up with reporting, you may consider limiting the number of contractors you hire. While this approach can help you reduce your workload, your business will still be without some of the essential services you need throughout the year. With an outsourced 1099 compliance reporting strategy, you can continue using independent contractors and benefiting from their talents.
- Ensure accuracy elsewhere: W-2 filing and other tax reporting need just as much attention. Without 1099 needs holding you back, your team can focus on accuracy in other reporting practices.
Harnessing the advantages of 1099 management outsourcing can help you run a better business. With the experts at Compass East by your side, you’ll know you’re getting a range of financial backgrounds with extensive experience. Working with our team allows you to remain compliant without fronting the costs of long-term employees.
Compass East Is Your 1099 Compliance Expert
At Compass East, we understand the intricacies of finances and tax reporting. We have experience working with high-growth businesses that rely on independent contractors for various needs. Our team can handle extensive 1099 compliance reporting requirements with accuracy and efficiency so your company can focus on growth in other areas.
Our outsourced 1099 filing service is only one of the many services we offer in our professional portfolio. As financial experts, we provide capabilities such as cash flow management, financial modeling, audit prep support and more. You can count on a combination of our services to make wise financial decisions and maintain your company’s success.