Hi - gosh I feel like a nutjob asking this question NOW, after ages in business but I have never ever rec'd a single 1099. I asked after them with a few clients and all of them said 'my accountant/lawyer/bookkeeper/uncle bob said I don't need to send you one...' (and yes, even with clients who paid out well over $600.)

Now that we've set up our LLP I want to be sure I handle things correctly, but is it MY fault if my clients don't send them? Is there something I'm supposed to be doing to let them know that I need one or is it really not a big deal? (I know it must be important, because it exists...but this one I am at a total loss on...)

Thanks to anyone who can clarify...

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While I am not a CPA, Tax Accountant or Tax Attorney, I do know that even if you are due a 1099, but don't receive one, you must report that income (because all income must be reported). Your clients may never get 'caught' not submitting them, but you don't want to get caught if they do. (i.e. they get audited and have to submit 1099s and your file gets flagged for the a-word, etc.)

Some of my clients require a W-9 submitted before the first payment is made for all vendors in order to determine whether a 1099 is required.

Because 1099s are not submitted the same as W-2s with tax returns, I doubt it is a problem. Someone else might have a different opinion.

--Kathy

LLPs should get a 1099 same as sole-proprietors.

It is completely the responsibility of the payer (your client) to issue the 1099. Some people just don't do them. They are supposed to, they just don't. They could get fined for not doing them but I've never heard of it actually happening. You have no responsibility in the matter other than reporting your income accurately on your taxes and giving them a W9 if they ask for one. If they don't do it then it's their problem.

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Lanel Taylor, CVA ~ Virtual Bookkeeper
Taylored Office Solutions
Custom fit solutions for all your office needs.

As long as you are reporting your income, there is nothing you need to worry about. It is the contractors responsibility to send you the 1099. If they don't and get audited it will be them that pays a fine. The 1099's are what the IRS considers "information reporting" it is so they can compare the 1099 records against your tax return to verify that you are reporting your income.

There is a lot of confusion as to who is required to send 1099's and to whom. Individuals are not required to send 1099's, so most sole-proprioter's assume that they are not required to send them either. People are also confused as to who they should send them to because they don't understand the different types of business structures. We are not required to send 1099's to corporations, and people confuse LLP's and LLC's with being corporations, which they are not.

The only responsibility you have is to send anyone you do business with, and who requests it, a W-9 Form with your information, whether they send you a 1099 or not is up to them.

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Rebecka Melson ~ Virtual Business Services

Great, thanks so much to all of you for the info. I feel much more settled about all of this now.
I do, and always have paid taxes against all of my income either way so it's good to know I'm in the clear.

Just wondering further to this - with the info about sending a W-9 when requested...would it make sense to send them yearly to all clients regardless of a request and then just let them deal with it on their end if they're so inclined? I don't want to 'stress' any of them out...but I also want to do whatever would be considered professional business conduct.

Thanks again so much for the insight

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I normally send them to new clients, whether they request it or not, just so I don't get bombarded at the end of the year. I wouldn't bother sending them to existing clients, unless they request it... save a tree!

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Rebecka Melson ~ Virtual Business Services

OK, that sounds good to me. Thanks again!

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This may seem like a silly question but where do I get W-9 forms to send to the clients?

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Brenda A. Jones
www.brevos.com

Hi Brenda
You can find them at http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=3

What I did was fill out once, print, sign, scan and have a copy I can send to whomever requests a copy.

--Kathy

I send all new clients a W-9 with their welcome packet. At the end of the year, I send them a reminder to issue a 1099 and recap the amounts that should be reflected as a courtesy to them. Here is a sample of what I send:

I would like to thank you for the opportunity to work with you this past year.

As we begin the New Year, I would like to remind you that you will need to arrange for a form 1099 to be prepared for my services. Here is a breakdown of what you paid in 2007:

Services: $xxxx.xx
Expenses: $ xxx.xx

Please be sure that the 1099 reflects *only* the amount you paid me for my services. The expenses are yours to claim as deductions on your own taxes.

As a reminder, the 1099 should be made out for Virtual Synergy, LLC EIN 12-1234567.

This past year, I received 1099s from everyone - last year only one client provided one. As long as you claim all the income to the IRS, you have met your obligation.

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Lorri Morin, CPVA
www.virtualsynergy.net