1. IRS Compliance
The IRS requires businesses to report certain payments made to contractors or service providers. Sending 1099s ensures compliance with IRS regulations.
2. Avoid Penalties
Failing to file or send 1099 forms can lead to penalties. The fines range from $50 to $290 per form (or more for intentional disregard).
3. Help Contractors Report Income
Independent contractors use the 1099 form to report their income on their taxes. Your form ensures accurate reporting.
4. Record Keeping
Sending 1099s helps your business maintain clear and accurate records of payments made during the year, simplifying your bookkeeping and tax filings.