Happy New Year (or maybe not If you are dreading the beginning of yet another tax season!) You may be shrinking from 1099 reporting, which can be one of the most time-consuming parts of the tax season for many business owners and their accounting departments.
However, using Sage Intacct to manage your 1099 reporting, as well as it’s e-file capabilities, will help not only ensure the forms accuracy, but also provide you with peace of mind as you file. Let’s first start by reviewing the steps you should be taking throughout the year to help streamline and prepare you for the filing process.
Step 1:
As new vendors or employees are added be sure you have created and set up a vendor type for the 1099 contractors within the additional information tab of each 1099 vendor. When dealing with employees you will set up the 1099 information within the time and expense module on the additional tab. Don’t forget to ensure the employee 1099 name is entered correctly. If you entered a 1099 name that is different than the Print as name, both fields will print on the 1099 form.
Step 2:
Create a 1099 vendor contact verification report. This report created using the customer reports feature will be very useful when needing to compare the 1099 contact records to the primary contact record assigned or validating that contact information is entered correctly. If you are unsure of how to create this report, please reach out to a member of the Tablespoon team for assistance.
Step 3:
Remove any duplicate 1099 vendors found. In the event you might have created two vendor records for the same vendor, you will want to inactivate one record and keep the other record active. When you do this, do not forget to move any 1099-eligible payments to the vendor record you left marked as active. IMPORTANT NOTE: Only submit one 1099 report for the vendor record you decide to keep. You must include any payments made to the duplicate vendor as Initial Open Values.
Step 4:
Don’t forget to order new tax forms. These are updated each year, so you will want to ensure you have ordered the latest forms for the upcoming tax season. You can find Sage Intacct approved forms at intacct.dsa-direct.com. These forms are the only ones Sage will support as they have been set to be perfectly aligned for printing.
Step 5:
(Skip if this is NOT your first 1099 season on Sage Intacct)
If this is your first 1099 season using Sage Intacct, you will want to have ensured all historical year to date amounts have been captured for each 1099 vendor or employee. Opening balances, or historical year-to-date (YTD) amounts are the 1099 amounts you had in your last system before you started tracking in Sage Intacct. If you set up your books with a start date after January 1st, you probably need to set up starting YTD balances for each 1099 vendor or employee. This amount is added to the total amount of the existing transactions tagged for 1099 treatment and is included in 1099 reportable totals.
IMPORTANT NOTE: You will need to know if you are to Enter opening balances at the top level or entity level. This will be decided based on whether your company is enabled to Issue a separate 1099 per entity:
- If this option is selected, you can enter historical YTD amounts at either the top level or entity level. Vendors and employees within entities are assigned entity-specific initial amounts.
- If you are not configured to issue a separate 1099 per entity, enter initial amounts for all vendors, employees, at the top-level.
Only enter the calendar YTD 1099 balance for a vendor or employee. This amount can be different from the entire amount paid year-to-date. If your company is on a fiscal year that doesn’t correspond with the calendar year, back out payments made to that vendor or employee during the prior calendar year. In addition, some of a vendor’s transactions may not have been 1099 entries. Should you have any of these they will have the 1099 box unchecked for those entries.
1099 opening balances can be entered one of two of different ways, manually or you may import the balances using Sage Intacct’s 1099 import templates.
Following the above steps will help you ensure you are ready for the upcoming 1099 reporting season each year. You can use Sage Intacct to run customized reports throughout the year that highlight 1099 accounts, helping to ensure the correct 1099 form type and other data is accurate and read for printing and submission to the IRS prior to the start of the hectic tax season.
Submitting 1099 forms to the IRS is straightforward and easy!
As you begin to process the 1099 forms for your organization, you will also be preparing copies that must be sent to the IRS. If your organization works with less than 250 vendors who require 1099 forms, the IRS guidelines allow your organization to mail these forms into the IRS. You will be able to print the forms directly from within Sage Intacct.
If your organization works with more than 250 vendor forms, your organization is required by the IRS to e-file. Beginning this year Sage Intacct allows you to prepare and send the e-file batch directly from Sage Intacct to TaxBandits for submission of the forms to the IRS. There will be an additional per form charge from TaxBandits.
The IRS began to accept the 1099 e-filing transmissions for the 2022 tax year on January 6, 2023. If you want to find out more about how to manage your company’s reporting or learn how to set up and use e-filing, schedule a call with one of our Tablespoon experts.