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What are 1099 and W9 Tax Forms? | Track1099 - YouTube
Channel: Catching Clouds Academy
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hey it's patti scharf CPA and co-founder
of catching clouds the leader in
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e-commerce accounting today I want to
talk about w9s and 1099s because those
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1099s are coming up do like the end of
next month and I don't want you guys to
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be scrambling so I want you to get
started now
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all right so what is a 1099 a 1099 is
kind of like a w-2 for your independent
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contractors so you know how like when
you're an employee for somebody else and
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your employer pays you to do work and at
the end of the year you get a w-2 and
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you use that to prepare your income tax
return same deal for independent
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contractors independent contractors
they're providing services to lots of
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different people and they need to get
1099s from all those different companies
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so that they can put it all together and
report it to the IRS now the IRS
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actually is using it just to make sure
that the service providers are reporting
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all of their income that's kind of
what's going on here so but you have an
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obligation as the one who is hiring
somebody to provide these services you
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have the obligation to report their
earnings to the IRS so you need to know
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how this works so who gets a 1099 so
generally it's going to be service
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providers so people who are providing
you a service it may be your landlord
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it may be your janitor it may be your
graphic design person it may be your
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attorney there are all kinds of
different things but in general if
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they're providing a service to you you
should be including them on your list
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but that's just one parameter the next
threshold is did you pay them more than
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$600 yes they're probably going to get a
1099 unless are they incorporated if
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they are a corporation so like typically
in their company's name it'll end
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corporation or Corp or Inc that means
there are corporation and they are
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exempt from having to get one of these
things now if they are a limited
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liability company they may or may not
we'll talk about that in a second and if
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their sole proprietor they probably will
the next parameter is did you pay them
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through cash check ACH venmo if you've
paid them wires if you've paid them in
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one of these different methods you're
going to have to send them a 10-9
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if you pay them with a credit card or
you pay them with PayPal
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then PayPal and the credit card
processor those guys are going to be
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sending out the 1099s so you don't have
to okay so how do you know if you're
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paying somebody who is a corporation so
you know whether or not you need to send
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them a 1099 and the answer is you use a
form called w9 all right so you need
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about five different pieces of
information from your service providers
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to know whether or not you're gonna send
them a 1099 and then if you are going to
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send them one you need this form so that
you know what information to include on
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the 1099 and those items are named name
of the person and their business if they
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have a DBA you need their either social
security number or their employer
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identification number you need their
address their email address and what
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type of business they are so their
entity type and now I'm gonna give you a
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bonus tip you should ask for your
service providers to provide you the w9
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before you ever pay them because they
are super excited to give you that w9 so
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that they can get a check versus waiting
until tax time when it occurs to them oh
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wait I don't want to include this on my
tax return and they want to like kind of
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trick the system so if you want to make
it easier on yourself remember this is
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your legal responsibility to be getting
this information and sending out these
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forms if you want to take care of what
you need to take care of do yourself a
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favor and get the w9s before you pay
them alright so now I'm going to talk
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about the process a little bit and what
we use we use a tool called track 1099
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this is not a paid advertisement no
affiliate fees with this or anything
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like that we've been using it for I want
to say six years give or take a really
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long time we've been really happy the
great thing about this system is you
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don't really pay for the service you pay
by the forum so if you file one forum
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you pay for one forum filing which is
amazing if you file 50 forums you pay
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for 50 forms but they have a pricing
scale so like the more forms you file
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that
it becomes perform and if you're an
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accountant then like you can count up
all of your different clients and total
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all those forms together and it just
gets cheaper and cheaper perform
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okay so here's roughly how it works you
set up an account on track 1099 you go
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into their w9 module and you send out an
email through their system to your
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service provider your service provider
will get an email they will fill out the
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w9 so they'll include their name and
address and taxpayer ID number and yada
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yada
they will electronically sign the form
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and it'll get sent back to you
when it comes back to you you will have
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a list of all the people you have
invited whether they need to get it to
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99 or not and basically all the
information you're going to need to send
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out a 1099 pretty awesome instead of
sending out one by one you can also
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upload a list or you can actually it
connects to zero it connects to
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quickbooks online it connects to
basically anything because you can
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import a CSV into the system if you want
to go that way if somebody gives you a
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paper w-9 you can also go in and just
like type it up and include that
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information that way so you can have all
of your w9s no matter how you're getting
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them loaded up into your system then
when it's time to file your 1099s in
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january you just click transfer to the
1099 module and it will take all the
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information that you have from the w-9
system move it over to the 1099 system
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with all the addresses and taxpayer ID
numbers and all that different stuff so
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you know that if there's a typo it came
from the person that you sent it to and
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not from yourself which is really
awesome and then you can just look in
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your accounting system and you can type
in the different amounts that is due to
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them the other option is if you have
this information loaded it like the
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address and taxpayer ID number and all
that stuff loaded into like zero then
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you can export it from zero in to track
1099 and you can send the 1099 s that
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way with all the numbers like the the
amounts are already pre-populated
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then once everything's in there and
ready to go you just schedule them for
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delivery they can be electronically sent
to all the independent contractors then
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you can also queue them up for a filing
with the IRS after you schedule
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everything with the IRS and you've sent
them off to the independent contractors
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the system will actually track when
things have been viewed and accepted and
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everything else if there are any errors
then it'll get kicked back to you and
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you can fix them it's just it's such a
great process for keeping track of all
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this stuff which it previously has
always been just a nightmare to try and
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keep track of all right so I've got a
few links for you down below for more
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information on 1099s and w9s in general
i've got a link to the track 1099 system
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so you can look that up and that's
pretty much it I hope you try it out if
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you'd like it and you look if you've
used it in the past and you liked it
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leave me some comments below if you
decide to use it this year leave me some
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comments I want to know how it went and
I think that's it I hope you liked this
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video if you did please like comment and
share if you haven't already please
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subscribe and I'll catch you later
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