To The Point
News from First Tier Accounting
January/February 2013
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| This Month's Quote |
"People often say that motivation doesn't last. Well, neither does bathing - that's why we recommend it daily". - Zig Ziglar
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| Fun Fact | | Do you own one or more mobile devices? You are not alone! According to Wireless Intelligence, 225 million US subscribers (71% of the population) own a combined 354 mobile devices, making that an average of a little over 1.5 per person. As more and more people own both personal and work phones, as well as connected tablets and laptops, this number is expected to continue to increase. |
| Connect with Me |
"Like" First Tier Accounting on Facebook for a chance to win a gift card!
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First Tier Accounting is committed to helping small businesses maintain accurate and timely accounting records, understand their financial data and use this information to better manage business operations.
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| Greetings! |
 Happy New Year!
I hope your new year is off to a good start! It certainly has been an interesting one from the accounting point of view, with the recent tax changes and all of the twitter about the "fiscal cliff". Although it remains to be seen what the overall impact and changes will be, there have been a few changes that are already in place. The employee portion of Social Security tax is now back to 6.2% (it was 4.2% for 2010 and 2011), which means increased withholding from employee checks. Also, a new Medicare tax of .9% for those earning over $200,000 is now in effect. The new mileage deduction rate for 2013 is 56.5 cents per mile.
In addition to the federal tax changes, Gov. Dayton is now proposing changes to the Minnesota sales tax law. Although the lowering and broadening of the sales tax may seem like a good idea, there are many hidden costs to businesses, including collection costs, reporting requirements and audits. I encourage you to write to Gov. Dayton to oppose the proposed changes.
You can stay up-to-date with tax changes and accounting news on my Facebook page (see link on left side of page). I am starting a new promotion in February for those who "like" my Facebook page - I will draw random winners each month for a gift card. So I hope to see you all on Facebook soon!
I am also pleased to announce that I will be teaching some new seminars for WomenVenture starting in February. The seminars are 1-1/2 hours long and focus on key areas of starting and running a successful business. The seminars are open to both women and men. Click on the "View my upcoming events" link on the left side of the page to see the dates and topics for the upcoming seminars. I will post new dates and seminars as they become available. Feel free to share the seminar info with others that may also be interested.
Have a great month!
Tracey
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1099s - What You Need to Know
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According to the IRS, you are required to file form 1099MISC for each person to whom you have paid during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;
- At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
- Any fishing boat proceeds; or
- Gross proceeds of $600 or more paid to an attorney.
A "person" in this case can be an individual (non-employee), sole proprietor, or non-incorporated company. Corporations (whether S Corps or C Corps) are not required to have 1099s issued to them.
Before issuing payments to anyone that meets the above description, or if you are unsure whether the company is incorporated, you need to obtain a completed W-9 form from the individual or company. The W-9 form is a request for a taxpayer's information, including their legal name and address, their federal tax classification and their taxpayer ID number. Be sure to keep the W-9s on file for every year that you have issued payments to the person or company. It is a good idea to request an updated form every few years, or whenever you are notified of a name or entity change. If a person or company refuses to give you a completed W-9 form or they willfully give false information, they can be subjected to fines and penalties. You may also be required to withhold a portion of the payment for taxes (called back up withholding) from the payments to the person or company, if they fail to furnish a W-9 to you. Consult with the IRS for further information on back up withholding. Because of the penalties, fines and back up withholding issues, it is imperative that you get the completed W-9 form BEFORE you issue any payments. At the end of each year, you need to review the payments made to those individuals or companies that qualify for 1099s. If the payments exceed $600, you need to complete and mail the 1099 forms to the recipients by January 31st of the following year. Most accounting software programs have the ability to print 1099 forms (see below for information on 1099s in QuickBooks). If yours doesn't, you can purchase 1099 forms at most office supply stores that include software designed to print on the forms or you can complete the forms manually. In addition to mailing the forms to the recipients, you are also required to file the forms with IRS. The forms can be filed via paper or electronically submitted; if you have over 250 forms, they must be filed electronically. If you need further information on W-9s or 1099s, or need assistance with preparing and filing the forms, please contact me at Tracey@FirstTierAccounting.com to schedule an appointment.
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Tracking 1099 Payments
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QuickBooks helps you track payments to vendors and prepare 1099s. In order to track payments, you need to enter the vendor's Federal Tax ID # (from their W-9 form) in the Vendor Set Up > Additional Info tab in QuickBooks. If the vendor is eligible for a 1099, be sure to check the box "eligible for 1099".
To set up the defaults accounts to track payments, go to Preferences > Tax:1099 and choose the option to map the accounts to proper boxes on the 1099 form.
NOTE: QuickBooks only prints 1099MISC forms. If you need 1099 forms for other sources of income, such as interest payments or distributions, consult your tax accountant for assistance in preparing these forms.
To order forms, click here. NOTE: Check with me before ordering - I can give you a discount code for up to 20% off of forms.
Also, be sure to order more than you need so you have extras in case of printer jams or reprints.
If you have any questions regarding 1099 forms or ordering, please email me at Tracey@FirstTierAccounting.com.
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