As a roofing business owner, you wear many hats, from overseeing administrative tasks to roofing projects. One hat you have to wear is managing your business’s tax obligations.
There is a lot of important tax information you should be aware of. From EINs to small business 1099s, the world of business taxes can feel a bit daunting. We get it. You’re a roofing expert, not an accountant! But don’t worry. Understanding your business’s taxes is easier than it seems.
Once you start learning about your tax requirements, it doesn’t feel quite so intimidating. In this blog post, we’ll explore the ins and outs of 1099 tax forms and cover the requirements for small business owners.
Before we discuss 1099s, it’s important to note that while this blog provides helpful information, we’re not tax experts. We highly recommend contacting a professional accountant for any tax-related guidance your business needs.
Now, let’s dive in! Here’s what roofers should know about small business 1099s.
What Is a Small Business 1099?
First, let’s make sure we’re all on the same page before we get any further. A 1099 is a tax form that totals the payments your business made to an independent contractor in a single calendar year.
Unlike full-time employees who receive W-2 tax forms, independent contractors get 1099s. If your business has paid freelance or contract employees over $600 a year, you must send each contractor a 1099 form before tax season.
1099 Form Types
There are multiple types of 1099 forms. Most of them won’t apply to you as a small business owner. However, if you’re curious, take a look at a list of available 1099s here.
The two most common 1099s for businesses are 1099-MISC and 1099-NEC. Let’s examine the differences between the two form types.
1099-MISC
The 1099-MISC form stands for miscellaneous and is used for reporting various types of income, like prizes or awards. As the name suggests, this 1099 is typically used for any income not covered under the other types of 1099s.
1099-NEC
The 1099-NEC form stands for non-employee compensation. This type of form is used when businesses hire independent contractors or freelancers. Until recently, 1099-MISC was used to pay contractors. Now, it has its own dedicated form to streamline the process.
When 1099s Need to Be Issued
1099-NEC forms should be sent out to your contractors before January 31 of the year after you’ve worked with them. For example, if you hired a contracted employee anytime during 2024, your 1099-NEC deadline would be January 31, 2025.
If you miss the deadline or don’t send the forms at all, you could be forced to pay penalties. The penalty amounts vary depending on the circumstances but could be between $60 and $310. Avoid these penalties by staying on top of your tax forms during tax season!
If you’re struggling to manage everything, consider outsourcing your accounting needs.
How to Fill Out a 1099 for Contractors
When you hire a contracted employee, it’s essential to have them fill out a W-9 form. This taxpayer identification form contains all the information you need to complete a 1099. Their W-9 will come in handy when it’s time to file taxes.
To fill out 1099s for your contracted employees, you can find the right 1099 on the IRS website and fill it out there. Or, if you want to make it even easier, you can use a service like QuickBooks Online.
Optimize Your Roofing Business Workflow
Managing your taxes is just one piece to running a successful roofing business. To keep your operations running efficiently, consider adopting tools to help you stay organized.
Roofing software is a comprehensive solution designed to make roofers’ lives easier. It gives you the tools needed to manage your marketing, sales, production, communication, and payment needs all in one place.
Start a free 14-day trial with JobNimbus to learn how roofing software can benefit your business today.
Table of Contents
Keep on learnin'
Related Articles
From Good to Great: Nurturing Team Strengths & Addressing Weaknesses
