1099s All over the place

[Johnny Best]

Just use your 1099s as your gross income and don't add anything else to it. Since everything over $600 has a paper trail the rest is not put down. Just saying.

 

[dypinc]

What really needs defined is what is a service or labor? Surly hemming a banner is not consider a service it is part of the manufacturing process. Then what is installing a wrap? Is it not part of the manufacturing process? If your a business, anything to produce a final product for a customer would not be considered a service or labor, or would it? Anyone in the sign business is reselling with markup and or producing a final product. Where is anything about that product considered a service or labor?

Back to that truck wrap. If I hired someone for 3 days to install that did not provide me an invoice as a business than I would need to give them a 1099-Misc as I understand it. Bob's truck wrapping should be treated no different than Bob the Electrician or Bob the Plumber. They give me a invoice I pay. What they report is on them not me?

 

[equippaint]

When you sell merchandise you should have the purchase expense already accounted for which will offset the amount on the 1099 to be only profit. Don't sell stuff through your business that you have bought with personal money or be sure to set it up as a loan so you aren't getting hit with taxes on gross sales.

 

[equippaint]

What really needs defined is what is a service or labor? Surly hemming a banner is not consider a service it is part of the manufacturing process. Then what is installing a wrap? Is it not part of the manufacturing process? If your a business, anything to produce a final product for a customer would not be considered a service or labor, or would it? Anyone in the sign business is reselling with markup and or producing a final product. Where is anything about that product considered a service or labor?

Back to that truck wrap. If I hired someone for 3 days to install that did not provide me an invoice as a business than I would need to give them a 1099-Misc as I understand it. Bob's truck wrapping should be treated no different than Bob the Electrician or Bob the Plumber. They give me a invoice I pay. What they report is on them not me?

You would have them fill out a W9. Then at the end of the year by jan 31 you or whoever does your tax work would file the 1099 and send them a copy. If they are a corp, you are supposed to verify their type because LLC sole proprietors get it too, some people also like to call themselves xyz inc and they really arent an inc. Like Bill said, its better just to do it to everyone. Get a good accountant too

 

[WildWestDesigns]

Anyone in the sign business is reselling with markup and or producing a final product. Where is anything about that product considered a service or labor?

Where it comes in if you (or you hire someone) that just does say the design work for a project(s) that amount greater then $600, that's when the 1099 comes into play. Depending on which side of the cycle you are on determines if you get the 1099 or you give it.

It all depends on the situation.

Back to that truck wrap. If I hired someone for 3 days to install that did not provide me an invoice as a business than I would need to give them a 1099-Misc as I understand it. Bob's truck wrapping should be treated no different than Bob the Electrician or Bob the Plumber. They give me a invoice I pay. What they report is on them not me?

No, if Bob the electrician did work for you and it was work that was related to your business (say wiring a sign), that's 1099 if it meets the 4 criteria (which includes what type of businesses that are required to get 1099 (including 2 types of corporations (legal/medical))).

Some businesses are linked to an individual person (DBAs, sole props, even partnerships). Technically they are businesses, but linked to actual individuals. Corporations (other then the 2 exceptions mentioned that do get 1099) tend to not be linked to an actual person (as far as the IRS is concerned when it comes to taxes).

 

[Solventinkjet]

Just to clear things us. I'm not adamant against 1099s. I'm 100% on all my financials and taxes because I like a clear mind to sleep at night. Just seemed odd that when I sell merchandise (along with service) that I get 1099-MISC. I get the argument for service or "labor" but selling things was where I questioned it. If one is going to cheat on taxes I'm sure the random 1099s wouldn't prevent them one bit to do so, just more of an annoyance for me when filing taxes.

I forgot to include a $600 1099 in my taxes one year and the IRS caught it right away and sent me a bill. They definitely check these things even for one individual. When you get a 1099 it means they sent a copy to the IRS too.

 

[BIG EASY DOES IT]

Become a corporation and they don't have to 1099 you.