Did You Know?
California law requires corporations, LLC’s, and common interest development associations to file a Statement of Information SI-200 to the Secretary of State on an annual or biannual basis. The filing fee for updating your records is only $25, however the penalty for not filing on time or at all is $250!
Submit your Statement of Information along with your $25 filing fee by mail or E-File.
Avoid large fines and penalties like this one simply by filing correctly, and on time.
Secretary of State – www.sos.ca.gov/
E-File Here – https://businessfilings.sos.ca.gov/
Should you be filing Form 1099? Many people are familiar with 1099s when they are on the receiving end. You may receive a 1099 from a company that has paid you to do work, and you know that you need to file it as income similar to a W-2. But what if you are issuing a 1099? We find the best tips for employers are on the Internal Revenue Service website. Here are some highlights:
Q: Who is required to file a Form 1099?
A: If you made or received a payment during the calendar year as a small business or self-employed individual, you are most likely required to file Form 1099.
Made a Payment
If, as part of your trade or business, you made any of the following types of payments in the amount of $600 or more, you are required to file an information return. The most common information is Form 1099-MISC.
- Services performed by independent contractors or other non-employees of your business
- Prizes, awards, and certain other income (see instructions for Form 1099-MISC, Box 3)
- Backup withholding or federal income tax withheld
- Crewmembers of your fishing boat
- To physicians, physicians’ corporation or other supplier of health and medical services
- For a purchase of fish from anyone engaged in the trade or business of catching fish
- Substitute dividends or tax exempt interest payments and you are a broker
- Crop insurance proceeds
- Gross proceeds of $600 or more paid to an attorney
There are other types of information returns you may be required to file:
- Interest on a business debt to someone (excluding interest on an obligation issued by an individual (1099-INT)
- Dividends or other distributions to a company shareholder (1099-DIV)
- Distribution from a retirement or profit plan or from an IRA or insurance contract (1099-R)
- Payments to merchant or other entities in settlement of reportable payment transaction, that is, any payment card or third party network transaction (1099-K)
Received a Payment
If, as part of your trade or business, you made any of the following types of payments in the amount of $600 or more, these are the most common information returns you are required to file.
- Payment of mortgage interest (including points) or reimbursements of overpaid interest from individuals (1098)
- Sale or exchange of real estate (1099-S)
- You are a broker and you sold a covered security belonging to your customer (1099-B)
- You are an issuer of a security taking a specified corporate action that affects the cost basis of the securities help by others (Form 8937)
- You released someone from paying a debt secured by property or someone abandoned property that was subject to the debt (1099-A) or otherwise forgave their debt to you (1099-C)
- You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment (1099-MISC)
Not Required to File Information Returns
You are not required to file information return(s) if any of the following situations apply:
- You are not engaged in a trade or business
- You are engaged in a trade or business and
- the payments was made to another business that is incorporated, or
- the sum of all payments made to the person or unincorporated business is less than $600 in one tax year (unless the recipient is an attorney or law firm, see 1099 MISC Instructions, Box 7)
Q: If the person I am paying reports their income on a 1099, why must I also report it?
A: You may think, as the payer, that you are doing double duty by filing a 1099 for payments you have made, however if you do not file the payment that you made on your own Form 1099, the IRS may not recognize the payment as an expense, and you may have to pay income tax on that amount! Check out our next blog on Penalties of late or not filing your 1099s!
The Affordable Care Act brings new laws and regulations for employers of all sizes, regardless of whether or not you will be required to provide health insurance to your employees.
State agencies will soon begin to conduct audits and levy fines on those employers who fail to deliver the Model Exchange Notice to their employees. Employers are required to provide the notice to each employee within 14 days of an employee’s start date and should provide it to all existing employees on an annual basis, regardless of size.
Open enrollment for the Healthcare Marketplace begins in November 2014 and some state agencies are opening sooner; now is the perfect time to notify your employees of the Health Insurance Marketplace.
The Affordable Care Act also means large employers will be required to provide health coverage to their employees. Applicable Large Employers, (ALE’s) will soon be defined as having 50 or more full time or full time equivalent employees (the number goes from 100 to 50 in 2016). ALE’s will be required to provide ACA compliant coverage to 70% of their full time employees or pay penalties. To meet the ACA standards employee shares must not exceed 9.5% of their annual wages.
Beginning in 2016 (for calendar year 2015) ALE’s will be required to file form 1095-C for each full time employee and a transmittal form 1094-C. These are processed similarly to W-2’s. Employers are not required to file these forms in 2014 however now is the time to begin preparation for 2015.
At On Track Business Management we are committed to helping you stay informed. We provide many resources on our website to help you stay compliant. Make sure to read our next blog “The Affordable Care Act Math of Employer Size” to determine whether or not you are considered an Applicable Large Employer.
Download the Model Exchange Notice and other important Affordable Care Act Forms
United States Department of Labor Employee Benefits Security Administration
Internal Revenue Services Affordable Care Act Tax Provisions
In the state of California, employers are required to file both a Quarterly Contribution Return and Report of Wages (DE 9), and a Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C) each quarter of the calendar year. Employers are also required to file a Quarterly Federal Tax Return (941) each quarter of the calendar year.
The deadline to file forms DE 9, DE 9C, and 941 for the third quarter, 2014 is October 31st, 2014. Failure to file and / or accurately report all wages and contributions by the deadline could result in fines and penalties.
It might be tempting to put off paying your payroll taxes and using those funds to pay other debts but beware! Borrowing from Uncle Sam could cost you more in the end, this is how some businesses end up in trouble.
Don’t miss the October 31, 2014 deadline!
Employment Development Department
International Revenue Service