Tax News

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Ask The Experts: Form 1099

Monday, October 01, 2012


Q: I’m just starting a business. I’ve heard about having to track certain kinds of vendors (or customers) in order to send them a Form 1099 at the end of the year? Does that exist? If so, how is it done, what needs to be tracked, and where is it reported?

A: 
You are correct in that if you pay an independent contractor at least $600 during the year for services to your trade or business then you must report those payments at the end of the year via Form 1099-MISC

The information you need to complete the form is the name, address and tax identification number for the independent contractor. The easiest way to obtain the details that you need is to have the contractor complete an IRS Form W-9. 

At the end of the year, you will complete a Form 1099-MISC for any contractor to whom you paid $600 or more. The form will include each contractor’s information as well as the amount that you paid each contractor.


Q: I recently started freelancing and would like to know whether I should have disability insurance in case I am unable to work for a period of time. If so, what’s the best way to go about getting it? Does the NASE offer disability insurance?

A: 
A big concern for the self-employed and freelancers is what happens to you and your family if you are unable to work due to an injury or sickness. Disability insurance is one way to allay some financial concerns and protect yourself.

Unfortunately, disability insurance is not an inexpensive product.

This type of insurance depends on many variables, including:

  • Health – Underwriters review doctors’ records to determine an applicant’s health.
  • Gender – Women are usually charged more than men when it comes to disability insurance.
  • Age – Disability insurance is only payable up to age 65.
  • Occupation – Some job classifications will be charged more than others. For example, contractors are a higher risk to insure than accountants.
  • Reported income – Most carriers do not insure more than 60 percent to 70 percent of your reported income.

If you are interested in researching disability insurance options, you should contact an agent or broker to assist you. To find one in your area, visit the Independent Insurance Agents and Brokers Association website. 

Also, the NASE offers Critical Illness Insurance, which can protect you should you face a serious illness.



Get More Answers

The NASE’s small-business experts are here to help you understand the ins and outs of operating a successful small business. And access to these professionals is free with your NASE Membership!

Just go online to the NASE’s Business Learning Center where you can ask the experts questions about:

  • Taxes
  • Health care expenses
  • Financial issues
  • Employee relations
  • Accounting rules
  • And much more

The experts are available 24/7 and ready to help!