How does the new 1099 law affect me and my business?
You need to start now to make next year go smoothly. Although the law doesn’t take effect until 2012, your prep should have started January 1st. So you could already be behind.
As the law reads now, you must have a W-9 form from all of your vendors from whom you purchase over $600 in goods or services. Some examples would be the individual who cleans your office, your computer person, your lawyer, your accountant and even American Express and Visa. Sounds crazy doesn’t it? Well it is, but it is the law.
So what is a W-9? You can find a blank one at http://www.irs.gov. It should be in the left 1/3 of the screen. Just click on it and it should pop up for you. Hit print and poof you have a blank W-9 that you can give to your vendors.
So why start now if you have until January 31, 2012 to collect this info? If you purchase a computer or a service in January of 2011, are you going to remember in December? Can you find the person you purchased it from, if you did not get it from a chain store? Yes, you would have to have the chain stores’ Tax Identification Number (TIN#) also.
Now that you are confused, let’s make your life easier.
Not only do you have to get everyone’s TIN# you must also give yours out. Your customers should be asking for yours also. Don’t wait for them to ask, be proactive. You know they won’t ask for it when it is convenient for you. It will be at the least convenient time. So make it at your convenience. You can either fill out a W-9 and mail it with your invoice to them or as we have done, provide it on your invoice somewhere. Your invoice is not signed like a W-9, but it should do the job. If you choose to send a W-9, I would print one from the above website, fill out all the information, sign it and then make copies as needed.
This is the law as of February 1st. We are hearing that this may all change by the time next year rolls around, but why wait? Be proactive.
Have a profitable year.
Bradley K Deck
Allman Johnson Company, LLC
Bradley works for Allman Johnson Company LLC an Indianapolis based Accounting / CPA Firm