Creating a kick-ass system to tackle 1099s

If bookkeepers are superheroes (which, let’s face it, we totally are), then 1099s are our kryptonite.

But not for this Wonder Woman, no honey. I have no fear, and you shouldn’t either.

My team and I spent a looooong time developing a year-long process that keeps us organized (and sane) during the 1099 season. So I’m going to share our incredible system for mastering 1099s and so you never have to feel stressed about them again (for real). 

1099 Rules for 2022

Okay, before diving into kicking 1099 time in the you-know-what, let’s go over some of the basics. Whether you’re a seasoned pro or this is your first time in the trenches, it’s always good to stay up-to-date on the latest tax year info.

1099 Due Date for the 2022 Tax Year

1099s need to be postmarked by January 31 of the following year. So, for the 2022 tax year, 1099s will be due on Tuesday, January 31, 2023. If (in the future) the 31st is on a weekend, the 1099s need to be postmarked, or submitted electronically, by the next business day.

1099 vs. 1096

When mailing in a 1099, remember to include its “BFF” – the 1096. A 1096 form summarizes the 1099s you are filing, including the total number of forms filed, and the total dollar amount. It essentially serves as a cover sheet for the IRS, while the actual 1099 provides individual detail. 

Include Qualifying Payments Only

Not all payments are created equal. The general rule is you send a 1099 to anyone you (or your client you do bookkeeping for) paid $600 or more in a calendar year. BUT… it gets a little complicated from there. Only some kinds of payments need to be included on a 1099. 

While you should leave off any transaction paid through credit card, debit card, or Paypal, you’ll need to include payments made by:

• Cash
• Wire transfers
• Checks
• ACH
• Zelle
• Venmo

How to Master 1099 Season 

Okay soooo, I have a confession.

1099 season hasn’t always been sunshine and rainbows around here. In seasons past, I’ve definitely said some things I wasn’t proud of, pulled some all-nighters, and barely met the deadline.

There’s a reason why this happened. And once my team and I figured it out, we came up with a yearlong system that has us singing “Hallelujah” come January.

The Problem…

Gather round, gather round – I’ll make this quick, I promise.

Before diving into how I solved 1099 season, I want to share why it was such a 🔥 hot mess express 🔥 for us.

Here’s the story:

It’s 2010-ish, my business is a few years old, and my team is about four people. I really don’t know jack about how to lead a team, but what I do know is January is here, 1099s are due, we are up to our ears in work, and missing probably…um..like 99% of the W9s that we need. 

I didn’t realize HOW bad it was (*Insert narrator’s voice*….it was very, very, very bad for Justine & her team) until not one person responded to my request for their W9. I ended up working until a gazillion o’clock on January 31st to meet the deadline, burst into tears after it was over, and SWORE to never do that again. 

Spoiler alert: It (almost) happened again.

I told my team that we were going to start collecting the W9s monthly. In July, I did a check-in…and guess what? 

Dum dum dum dum dummmmmmm

No W9s. 

I’m not proud of it, but I quickly went from Wonder Woman to Incredible Hulk. No surprise, it wasn’t pretty. But… 1099s have never been a problem since.

Why? Because I designed and implemented a system, and baked in accountability with my employees. 

The Solution…

We collect W9s throughout the year so we don’t have to pull 14-hour days come January. 

Here’s how we do it:

Stick to a schedule: We collect the W9s every month. Yes… every single month we reach out to vendors requesting their W9s. If we are managing Accounts Payable for our clients, we collect the W9 before we issue payment. 

Make it easy: If you want someone to do something quickly, make it as simple as possible for them. We email a W9 link to the vendors, making it easy peasy for them to get us their information ASAP.

Use a 1099 app: My team and I looooove Year.li because it’s absolutely brilliant and easy to use (yes, that’s an affiliate link). 

Work now, not later: We put the W9 vendor information into Year.li as soon we receive it. We don’t wait until January folks! 

And then we dance: Cue the Rocky anthem! VICTORY! When January rolls around we aren’t breaking a sweat, and those 1099s are getting sent in well before the deadline.

Conclusion

Look, our system for conquering 1099 season isn’t groundbreaking… it’s not even complex. It’s just a matter of thinking ahead to thank ourselves later. If you’ve developed a system of your own, I’d love to hear about it! I’m always an advocate of working smarter, not harder – and improving efficiency is kinda my jam 😎

Til next time my friends, 

Justine

P.S. Someone recently asked about 1099s on our free Facebook group. Come on over & join in  on the conversation!