Are You Ready to Send Out 1099’s?
If you’re reading this article, your answer to this question is probably “no.” The reason I know this, is because this law firm signed up almost 1,000 new clients in 2016, and of those approximately 1,000 new clients, we’ve only received 4 requests for a W9.
1099’s and W2’s are due January 31, 2017!
4 clients out of nearly 1,000. That’s about 0.4%. The remaining 996 clients haven’t yet bothered to contact us, asking for a W9, and I worry whether our clients know that 1099’s and W-2’s are due no later than January 31st, 2017 to both their employees and the feds.
The general rule is that if legal fees are related to the operation or conduct of a business, they are deductible. To be deductible, however, a business must obtain a W9 from the attorney (or law firm) and issue a 1099. Without that 1099, you may not be able to properly deduct that expense — please consult with a CPA or tax professional.
It’s Time to Request W9’s to insure your 1099’s are filed correctly
What you should be doing, is frantically sending emails to all your attorneys, your landlord, contractors, vendors and any other business you paid money to in furtherance of your business, and requesting a W9 and you should issue 1099’s by the deadline of January 31st, 2017. Only in this way, are you assured of maximizing your deductions and avoiding potential fines by the IRS for not properly issuing 1099’s.
And in the future, you should simply refuse to hire (or pay) anyone that doesn’t first issue you a W9. Make it part of your business process: All vendors, contractors, lawyers and other professionals should have a contract with your business, and they should all give you a W9 BEFORE they start working for your company.
If you’ve requested legal services from L4SB, you should contact us to request a W9.
Law 4 Small Business, P.C. (L4SB). A little law now can save a lot later.