Startup and fast-growth companies have a lot on their plate to maintain operations and achieve growth objectives Typically, these companies are not able to hire many employees in the early years of doing business because of the cost of salaries and benefits.
For example, fast-growth companies are inherently designed for revenue to outpace costs. One way to support this goal is to reduce costs by hiring as few employees as possible to support key functions.
That’s why most companies in this position rely on outside resources to support key aspects of the business, such as accounting, marketing, legal, operations, and technology. This approach carries a unique set of tax implications, though, involving 1099 vendors and contractors.
Then, as companies grow and the number of external resources grows, it can be difficult to keep up with all of the 1099 tax forms that need to be filed with the IRS and also sent to each vendor or contractor. We often see companies struggle in this area.
That’s why we recommend working with our team of experts and utilizing the Oracle NetSuite ERP platform to simplify the process for your company. Learn more about how 1099s are made easy by working with us.
Work With Finlyte to Understand 1099 Obligations
The 1099 IRS tax form is used to report compensation given to non-employees for services provided. The IRS requires companies to file a 1099 for every contractor or vendor that they paid at least $600 during their annual reporting period.
There are multiple types of 1099 forms. Two of the most common types of 1099 forms that pertain to your business are the 1099-MISC and 1099-NEC forms. Let’s examine when you would file each of these.
- 1099-MISC: You report Miscellaneous Income for each vendor or contractor that you paid at least $600 in the course of running your business.
- 1099-NEC: You report Non-Employee Compensation for each independent contractor or attorney that you paid at least $600 in the course of running your business.
It seems like there isn’t much difference between the two IRS forms, which is where it can become confusing for business owners to understand which form to use and when. This is where our team of experts can help provide you with guidance on how to satisfy IRS obligations for each resource that you utilize.
Plus, it’s important to get this right now because a new Form 1099 is coming for Tax Year 2022. This means that reporting rules could be changing for your business. We can help assess whether this change affects your business.
We also want to make sure you have the best technology in place to make 1099s simple for your team.
Utilize Oracle NetSuite to Gather All Information In One Place
Many start-ups and fast-growth companies waste valuable time trying to manage all of their 1099s in spreadsheets or basic accounting software tools. As your business grows and you expand into new markets, you need a more robust solution to help you keep track.
That’s why we recommend the best-in-class Oracle NetSuite ERP platform to manage this complex process. The cloud-based platform enables you to efficiently save all of your contractor and vendor information in one place to keep you organized.
Through the use of NetSuite, the process becomes much simpler to produce the required tax forms that need to be filed with the IRS by the stated deadline. This will help reduce time, effort, and costs. Plus, you’ll be better positioned to avoid penalties for late filings.
According to 2022 IRS guidelines, businesses that fail to file a 1099-MISC or 1099-NEC by the stated deadline will incur a penalty ranging from $50-280 per form. The penalty range is based on how late each form is filed. Additionally, businesses that intentionally disregard the requirement will incur a penalty of $570 per form.
As you can see, the cost of not filing on time or not filing at all can quickly add up. This is less-than-ideal for startups and fast-growth companies, which is why we recommend working with Finlyte and utilizing NetSuite ERP to simplify the complexity of the process.
Contact Us for 1099s Made Easy for Your Company
If your company is spending too much time managing 1099s or if you are not confident in your ability to satisfy IRS requirements, let’s talk about a solution.
We’ll make sure you are on the right path to produce the appropriate 1099 forms for each contractor and vendor, meet the filing deadlines, and stay organized using the Oracle NetSuite platform.
Contact us today to let us know how we can assist your company. Our team of experts can further explain how 1099s are made easy using our solution!