1099s Shouldn’t Be Painful. You Just Need The Right Tools.

How the 1099 process works


Another start to a tax season and the 1099 filing deadline has come and gone. 

Was it a seamless process for you? Or, did you suffer and labor through it like most of the population? 

While the 1099 filing process is flawed, confusing, and a list of other words not appropriate to write down, it really isn’t a hard process when done well

Just like most things in life, the job becomes much easier once you have the right tool for the job. 

Imagine this: 

You’ve been using a fork your entire life to eat a bowl of soup.

Is it slower? Yes

Is it messier? Yes

Can it work? Yes!

Then one day, a friend notices your “error” and hands you a spoon.  

Wow, the amazing difference the right tool can make! 

Less mess, improved speed and completion time!

That’s what this blog is going to do for you for your 1099s. I’m the friend with the spoon. 

Let’s jump in. 

Want to Skip Ahead?

A seamless 1099 process is an in-depth article, so we will only touch over the main points for the purpose of this article. Here are the 5 steps we’ll cover: 

  1. Find a better accountant
  2. Get a W-9 from every vendor*
  3. Stop using paper
  4. Setup your vendor for 1099 tracking
  5. Sit back and enjoy some lemonade (or beverage of choice)

Wait…What… there are only 5 steps and 1 of them is to sit back, relax and enjoy a drink?

Absolutely. So maybe don’t skip any.

Step 1: Find a better accountant

If you are still gathering paper W-9s, wondering who and what needs to get reported for 1099 purposes, and spending more than 5 minutes in January helping your accountant file the forms, then your process is old, antiquated, and quite frankly stinks.  

Find a better advisor who will make your accounting and life easier.

Step 2: Get a W-9 from every vendor*

Okay, not every vendor (don’t bother your utility provider, etc) – but for any non-publicly traded company, you should have your vendor fill out a W-9 form as part of your vendor onboarding/acceptance process.

Do you know how many times I have heard clients in the past say:

“They are a corp, we don’t need one”

“They told me they don’t need a 1099”

Get the damn W-9 form filled out.  

Sometimes the vendor is right, but a lot of times they are wrong and need to have a 1099 issued to them.  

The only truth to determine it is a completed W-9 form.

Not an email, not a phone call, but a completed W-9 form. It doesn’t take long!

Don’t work with or pay a vendor until the form is completed.

Step 3: Stop using paper

There is this really cool thing nowadays called software, and here is what it can do for you:

Email out the 1099 request.

Email you a confirmation when it is completed.

And voila! You’re done. 

Your vendor can complete the form as a fillable PDF so everything is typed and legible with no misinterpretations. 

And they can electronically sign the document and quickly send it back. 

Never again will you wonder if you are missing a W-9 form from any vendor, as the right software will let you know of any uncompleted requests in the system. 

Pretty cool, right? 

We use Track1099. Check it out. 

Step 4: Setup your vendor for 1099 tracking

One of the reasons I made “find a better accountant” as Step One is because you really should be using their W-9 software, and they should be overseeing the accuracy of the W-9 forms to help you out with this next step.

So, Step 4. If a vendor is eligible for a 1099 form, update your software (See: Xero!) to mark them as eligible for 1099 reporting.

Step 5: Sit back and enjoy some lemonade

Now, the step you’ve been waiting for.

It is now January of the following year.  

Your final step is to complete your bank account reconciliations and let your accountant know they are complete.

Your accountant will access your Xero file and run the necessary reports to see total eligible 1099 payments, by vendor.

They will transfer all electronically completed W-9 forms into their 1099 reporting software, enter in the $$ amount being reported, and e-file the forms for you.

We told you – painless! 

Because you used the electronic W-9 process back in step 3, your accountant automatically has every vendor’s email address and can electronically submit all 1099 forms to your vendors via email. They can also track who accessed their form or not.  

Gone are the days of the form getting “lost in the mail” and your vendors bothering you that they never received it.

By following these 5 steps – your 1099s truly become a painless process.

Utilize the correct tools, get a good partner/advisor on your side, and you’ll be well on your way to drinking lemonade next year.

Start now!

How does the 1099 process work

Need a better accountant?

We’re always here to help. 

You can reach out to us at any time by using our easy calendar here. The first call is free. Let us know your concerns and we’ll see how we can help. 

Until next time! 

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Matt C


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