Self-employment comes with a lot of responsibility. There is somewhat of an “honor” system in place when it comes to reporting income. In many cases, employers will take deductions for your services or contract, yet they will forget or disregard sending you a 1099 when tax season rolls around. You might not receive 1099s self-employed from a client or company, but that does not mean you don’t have to report the income.
In most cases, the issue regarding 1099s self-employed arises from the payment defined in the contract. If a company pays an independent contractor less than $600 in a calendar year, they will not need to send a 1099. This may explain why some contractors will not receive 1099s.
If a company has paid you more than $600 but still has not sent a 1099, they may face a fine. Still, it is up to you to report this income, even without the required form.
How to Keep Track of Your 1099s Self-Employed
It is very difficult for the IRS to track a self-employed person’s actual income if these reports are not filed. This puts the responsibility on you, the contractor, to keep a record of your services and payments. We recommend creating a spreadsheet for all company contracts, then including the amount paid for each company in its own column. This will help you understand whether a company has hit the $600 threshold. If they have, they will need to send you a 1099.
However, the law states that whether you receive a 1099, you must report your income. A topline spreadsheet, pairing companies or clients with the amount paid, can also help here. Keeping track of your contractor payments can be difficult. Keep a record of all payments made. This will make annual tax filing easier, as you’ll be able to know exactly how much income to report. If you want to learn more about 1099-MISC forms and how it affects you, the IRS is a great resource for further information.
How to Deal with 1099s as a Company
If you work for a company that frequently contracts work, you’ll need to understand your responsibilities related to 1099 filing. Investing in a W-2/1099 Software, like what we provide at AMS, can help reduce miscalculations and speed up your accounting process. Additionally, our Forms Filer Plus can be a great resource for companies who need to file various payroll-related forms.
If you have any questions, call our Sales and Information team at 800-536-1099. We can provide more information on how our software processes payroll and assists you further with being compliant and organized.