By Erica Kasper
Content Marketing Manager
The end of the year is almost here, and that means getting ready for the year-end forms process. Year end is always a stressful time, but this year is especially complicated thanks to the new 1099-NEC, the revised 1099-MISC, and other regulatory changes. How can you be sure you’re ready to tackle this year’s year-end forms?
1099-NEC and 1099-MISC
This year, the 1099-NEC has returned for reporting non-employee compensation. You must use the 1099-NEC when reporting payments that you’ve made to contractors, gig workers and other non-employee workers to whom you paid more than $600 during the year. With the 1099-NEC in use, the 1099-MISC has been adjusted, as well. Non-employee compensation used to be reported in box 7 on the 1099-MISC, but that is no longer the case. The 1099-MISC is still used for other forms of income, however, so be sure to check the IRS website (www.irs.gov) for the most updated information about filling out these forms.
The 1099-NEC must be distributed to recipients and filed with the IRS by the last day of January. Since January 31 falls on a Sunday in 2021, the deadline will be February 1. The 1099-MISC must be distributed to recipients by January 31 (February 1 in 2021), and for filing with the IRS, the deadline for the 1099-MISC is on or before March 1 for paper filing and on or before March 31 for electronic filing.
Preparation is Key
It’s important to start preparing for year-end when the year begins. Businesses must keep careful records throughout the year to make sure that all data are correct. Employee wages and time off should be up to date, all paychecks should be recorded, and employee benefits and deductions must be accurate. Taking the time for record keeping during the year can ensure compliance and save a lot of headaches when year-end arrives.
It’s also vital to make sure that your employees’ personal information is correct and updated. This can be time-consuming, but if you offer your workers an employee self-service portal, they can update and manage their personal information themselves. This ensures your HR team isn’t weighed down by the extra workload at an already busy time of year, and it has the added benefit of empowering and engaging employees. When many workers are remote, engagement is especially valuable, which is why Greenshades offers an employee self-service module with our payroll and HR platform.
Starting the Process
As you get ready for year-end, you’ll need updated employee and pay records, as well as knowledge of the federal, state and local tax rates that affect your business and your employees. With many employees working remotely, that can mean staying up-to-date on a variety of jurisdictions. This can be a labor-intensive process, so be sure to allow plenty of time. An easier way to handle this process is to use a payroll software system like the Greenshades payroll platform that maintains all payroll data and updated tax rate information in a single, easily accessible location.
After your year-end forms are prepared, you are responsible for distributing them to workers before the deadline passes. Many employees opt for digital forms, but for those who need paper, this year has presented unique challenges. Many employees are working from home instead of going to the office, and if you require some of your workers to go to the office to print and mail year-end forms, you are responsible for ensuring the workplace is safe and disinfected for your staff. A better option may be a remote print and mail service. Greenshades print and mail service allows you to process, print and mail your forms from anywhere, without having to send anyone to the office. It’s a cost-effective way to handle year-end form distribution with as little hassle as possible. If year-end forms are stressing you out, let Greenshades help with that. Contact us at email@example.com to learn more about how we can make year-end smoother and simpler for you.