A common problem arises at year end in the United States with vendors that were not properly set up as 1099 vendors. 1099 vendors are vendors who are required to be sent a 1099 tax form from the company. The types of transactions that can require a 1099 include rent, legal payments, and contract labor among others. The requirement is broad enough that most vendors who are not incorporated (proprietors, partners, and so on) may be due a 1099 if they are paid more than six hundred dollars in a year.
Recent changes to U.S. law have dramatically increased the number of 1099 forms that will need to be sent in the future. Essentially, all payees who receive more than $600 in payments will need to receive a 1099 in the future. As part of this legislation the fines for 1099 reporting errors have also been increased significantly. Correctly reporting 1099 information is more important than ever and this recipe can save companies a lot...