Team 1099
When a dog owner decides to enter their dog in a new sport or activity, they need to determine who will be handling their dog. Should they hire another or do it themselves?
In the business world, the same type of decision making needs to occur when you run your own business. Are you in the position to hire full time employees or should you hire consultants or Team 1099 as we are referring to them here. Most solopreneur managers will invariably be a part of Team 1099 as their ‘solo’ description means they are the only worker. The 1099 form is an IRS form which documents miscellaneous income made by an individual or a business that typically is not your employer.
A 1099 form needs to be issued when a consultant or contractor to your firm is paid $600 or more on an annual basis and they are a specific legal structure. If your consultant is an individual, an LLC, a PLLC, or others listed by the IRS, they require a 1099 at $600 or above. Normally, if you pay them with a credit card, you may not need to issue the 1099 as the credit card record can be used to document the sale. Check with your accountant on the nuances. Doing business with larger firms that are legally structured as an S or C Corporation normally does not require the issuance of a 1099. Again, your Circle of Trust Accountant is the expert and will help you sort through the details.
Often, small businesses have to 1099 their accountant, attorney, and brand manager if they are not organized as corporations. Their fees will likely exceed that $600 threshold annually. If you act as a project manager in your industry, any consultants working with you and paid through you from the owner will also likely need 1099s, assuming the minimum dollar threshold mentioned above is met and the legal organization is not a corporation or other exempt structure.
Record keeping and issuing the 1099s is very important and a conversation with your accountant should occur early on to make sure both of you work in tandem to meet deadlines. The end of January is normally the timeframe by which the 1099s need to be issued for the previous year. Working in sync with your accountant and following the rules is an important step in handling this aspect of your business.
Team 1099 can be an efficient approach to working with others if your work permits and the requirements of dollar limit and legal structure are met.
Whether you are out in the field with your dog enjoying exercise and intellectual stimulation or you are looking to partner and collaborate with professionals in your work field, know your options on how they are rewarded or paid.
Be well.
