Brad, I’m not sure how to get my 1099-MISC forms to independent contractors I hired to do work for me last year. Am I missing something? Chad Charleston, SC
You are not alone. More and more business owners rely on independent contractors to do work. In fact, a study in 2015 shows that nearly 54 million Americans do some variance of freelance work—that’s a lot of 1099s. Using contractors is a great way for businesses to scale up, but you’ll want to get ahead of the extra paperwork before they begin the work.
Hunting down all those independent contractors for tax IDs and current addresses can be time-consuming. Luckily, there’s an easy way to avoid a panic attack come tax season: make sure you always get a W-9 from contractors before you pay them. This form asks for the contractor’s name and their business’s name, entity, and tax ID number. Think of a W-9 as your magic ticket to making 1099s a breeze.
It’s safe to say most independent contractors want to get paid for their work, which is why it’s smart to have them fill out a W-9 before they’re paid. And they’ll be more motivated to get you the information promptly. There’s nothing worse than chasing people down for information months after they did the work. Enter the W-9 information into your accounting system when you receive it so your 1099s are painless later.
What’s the takeaway? Those nitty-gritty details might seem like extra work in the beginning, but they’ll save you time and effort in the long run. Digital agencies frequently use freelance contractors. Want to learn more about digital agency accounting?