A lot of good and bad comes with the end of the year. The good is reflecting back on our performance. The bad is doing all of the tax- and accounting-related work that needs to get done.
I should say that reflecting on our performance is good mostly because we’ve been growing and the numbers look great. After making sure I had reconciled everything to avoid any mistakes, I crunched our final numbers: Revenues increased 79 percent, and profits grew 49 percent! I hired my first employees in 2012 — one full-time and one part-time — and those are numbers I’m very happy to see.
But then there are the other parts of closing out the year that aren’t quite as much fun. When it comes to tax structures, my business is a single-member LLC. In the eyes of the government, it’s a disregarded entity, so my profits as a business owner are just
recorded as personal income. That part is easy, but I still have to fill out a form for the state of California and pay the franchise tax each year.
More importantly, I have to make sure that everyone associated with the business gets the tax forms they need from me. For my employees, the payroll provider I use magically spits out W-2 forms for them. That’s easy. But for
my independent contractors, it’s a more manual process.
run a report to find out all “unincorporated vendors” to whom I paid more than $600 last year. (Tip: save that report in your accounting system because you’ll need it for future years.) For those folks, I do have to issue a 1099 form. That doesn’t include corporations, for whatever reason. For me, the list is primarily made up of my independent contractors and attorneys.
You would think there would be a really simple way to just issue the 1099 electronically and be done with it and you’d be right. There are services that do exactly that, offered by a variety of independent
companies (including Intuit). Some charge by the form while others use a flat fee.
But no matter what method you use, it has to be done quickly. The 1099 forms must usually be with your vendors by Jan. 31 each year, but this year it’s been extended to Feb. 15. I’m just about done myself. Soon enough, it’ll be time to do it all over again next year. Hopefully we’ll have more growth to celebrate.