Online services make it easier to remain compliant with 1099s.
If you’re a U.S. domainer that pays freelancers, contractors or a law firm, then you’re likely required to send out 1099s each year.
Fortunately, there’s an easy and cheap way to do it online.
First, here are examples of whom you need to send a 1099 to:
- Your web guy you paid to fix up or work on a website
- The landlord you pay rent to for your office
- The law firm you paid during the year to respond to a UDRP or handle a cease & desist
- A freelance writer who provided you with content
- A domain broker who helped you sell one of your domain names
There are exceptions.
First, you only need to send a 1099 to a U.S. person or entity that you paid $600 or more during the year. Second, you don’t have to send them to most corporations and LLCs that are organized as S-Corps or C-Corps. (The exception to this is law firms.)
Odds are that individual web design person you paid, even if they have an LLC, does not qualify for the exemption because the LLC is a disregarded entity.
You can see a complete list of requirements and exemptions here.
There are two steps to issuing 1099s. First you need to collect a W-9 with the recipient’s information, then you need to send them a 1099 by January 31 of the following year.
Now, many years ago when I started sending 1099s, you basically had to hire an accountant to take care of it rather than deal with all of the paperwork yourself. You also had to mail everything to the people you paid. It’s much easier now.
I use Track1099 to make this dead simple.
Track1099 enables you to collect W-9s online and then issue the 1099s via e-delivery as well.
You just need the payer information and the recipient’s email address. Track1099 asks the recipient to provide all of the required information and then sends the 1099 to them.
It’s also cheap. For up to 25 W-9 forms it’s just $9. You can avoid this fee by collecting W-9 forms yourself. You then pay $3.99 for the first 3 1099s and $1.99 for each additional one.
For most domain investors, you’re probably talking about less than $25 out-of-pocket.