As a business owner, you have a responsibility to file various information reporting forms. This letter highlights some of the most common year-end filings.
Information Reporting (Form 1099 and DE 542) For Independent Contractors
****Important: Filing deadline for certain 1099’s has changed to 1/31/17 for both the recipient and government filing copies!!!****
Form 1099 is used to report payments made to reportable vendors. In addition to the penalty imposed by the IRS for failing to file Form 1099, the California Franchise Tax Board can disallow deductions when a business fails to file information returns, including Forms 1099 and DE 542. Businesses are required (by the IRS) to obtain a completed form W-9 from independent contractors. The information collected on Form W-9 is used by businesses to file Form 1099.
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If you are a Schedule C or Schedule E-filer, please be informed that you are required to indicate on your income tax return whether you have filed all the required Forms 1099.
Besides filing compliance, the IRS has recently focused their efforts in ensuring that businesses are properly classifying workers as independent contractors versus employees. It is not always easy to determine the employment status of a worker as the rules are complicated and each worker’s situation is different. To help you in making an informed decision, we have enclosed a checklist for your perusal.
City Business Tax
Businesses generally are required to register with the City in which they do business. Depending on the type of business activity you are engaged in, your business may require special permits or licenses. Some cities impose annual business tax for the privilege of doing business. For example, for City of Los Angeles, each year businesses are required to renew their business license and pay any applicable business tax. The business tax renewal filing is due on January 1st and becomes delinquent on the first business day of March. If you would like more information on the particular city that your business is located, you can contact us or you can contact your city’s local office.
Business Property Statement
Counties within California impose business property tax based on assessed value of business personal property. Business personal property is valued annually as of January 1. Businesses with personal property that cost $100,000 or more must file a Business Property Statement each year by April 1 (delinquent if not filed by May 9, 2017).
Please keep in mind that this list is not comprehensive. Tax laws are very complicated and there are many more information reporting laws that you should be aware of. Our ability to assist you in the area is limited how clearly and concisely you communicate your business activities to us. We should be able to identify most requirements through our regular contact with you but the ultimate responsibility for filing your information returns is yours. Please contact us if you are uncertain about how your business activities may impact your reporting requirements.