Bookkeeping for 1099s and W-2s: What Small Businesses Need to Know
January isn’t just the start of tax season – it’s also the deadline month for issuing 1099s (to contractors) and W-2s (to employees). Clean bookkeeping ensures you file these forms accurately and on time.
Key Deadlines for 1099s and W-2s
- January 31: IRS deadline for filing 1099-NEC and W-2 forms
- Penalties apply if forms are late or incorrect
Bookkeeping Steps for 1099s
- Track payments to independent contractors
- Collect W-9 forms early
- Flag all non-employee compensation over $600
Bookkeeping Steps for W-2s
- Ensure payroll is fully reconciled
- Verify employee wage and tax withholding records
- Cross-check payroll provider data against books
Common Mistakes to Avoid
- Mixing employee vs. contractor expenses
- Failing to send corrected forms (1099-C, W-2c)
- Waiting until January to collect W-9s
How Outsourced Bookkeeping Simplifies Compliance
- Real-time tracking of contractor and payroll payments
- Automatic preparation of year-end totals
- CPA oversight to avoid IRS penalties
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FAQs
Who needs a 1099?
Any independent contractor paid $600 or more in a calendar year.
What’s the deadline for W-2s and 1099s?
January 31 each year.
What happens if I file late?
IRS penalties range from $60 to $310 per form, depending on how late the filing is.
