Every business owner should be aware of their responsibility when it comes to submitting 1099 forms to the appropriate parties. There are many instances in which a business must submit 1099 forms, especially in cases where a contractor was hired to perform a job and earned over $600 within a tax year. When contractors work for businesses and earn more than $600, it is the responsibility of the business to not only ensure that all contractors are provided with a 1099-MISC by January 31st of each year, but to also ensure a copy is submitted to the IRS so they can know what to expect during tax time.
Penalties for Failing to Provide a 1099-MISC
If a business, for whatever reason, fails to provide a contractor with a 1099 -MISC, or the business fails to submit a copy to the IRS, then the business will be required to pay a penalty if the IRS were to discover this violation. The penalty could vary, depending on if the IRS that a business intentionally failed to submit a 1099-MISC, or if a business was simply late sending it in. If the IRS believes that the business purposely failed to submit the tax form, then the penalty can more than double.
If a business is late with their submission of a 1099-MISC, then late penalties begin at $50 and go up from there, depending on how late the form is. Businesses could pay as much as $280 per form for late 1099 forms, and a small business can be charged up to a maximum of $1,113,000 in penalties if there are numerous forms in question.
Paying this kind of money could easily cause a company to go out of business, which is why it’s imperative that these forms are submitted in a timely and correct manner. Penalty costs can add up fast, and companies that are regularly late can throw away a great deal of money in penalties.
Penalties for Submitting Corrected 1099-MISC Forms
If a company makes an error with the first 1099-MISC form, then a corrected 1099 form will need to be submitted. However, submitting a corrected 1099 form doesn’t come without penalty, and the business will usually be required to pay $100 per incident. The company must also pay an additional $100 for the statement that needs to inform the taxpayer that they were sent an incorrect tax form.
How to Avoid Future 1099 Errors
If you are a business owner who has paid your fair share of penalties due to submitting late 1099 forms or forgetting to submit them altogether, it doesn’t mean that you’re incompetent and can’t properly manage your business. It simply means that you’re human and that running a business can be very busy and hectic, making forgetting to manage important tax forms simple.
However, there is a way to ensure that you are never required to pay a penalty assessed by the IRS again. How is this possible? There are third party agencies that can take over all your financial and tax-related obligations so that you no longer have to contend with them. These agencies, like Tab Service Company, can efficiently and easily manage your financial information so that you never have to worry about improperly completed tax forms, late tax forms, or tax forms that were forgotten about altogether, again.
The Cost of Third-Party Agencies
Unlike what many business owners believe, hiring a third-party agency to manage certain aspects of your business is not expensive in the least. In fact, you have probably paid more in IRS fees and penalties for late or missed deadlines than you would have to pay an agency like Tab Service Company. Tab Service Company has been in business for many years, and not only are they trustworthy, dependable, and efficient, but they specialize in providing businesses like yours with these and similar services.
As you can see, fees assessed by the IRS can really accumulate fast, costing your business hundreds or even thousands of dollars unnecessarily. There is no need to be slammed with these penalties on an ongoing basis, nor is there any reason to cause undue stress on yourself by trying to ensure that all the necessary tax forms have been sent out before the deadline. You should seriously consider hiring a third-party agency to take this task off your hands, so you can spend your time managing other responsibilities, while saving money in the process.