First let's start by addressing the name change, a 1099-nec and 1099-misc are not the same thing however until 2020 the 1099 misc was used for reporting non- employee compensation where as now the 1099-NEC is used for this purpose.
Now that we have that all cleared up who gets a 1099- NEC? Any individual not on the payroll on a contract to complete a project or assignment, who was paid more than $600.00
So in plan English what this means is if you made an individual more than $600.00 to do graphic design, social media manager, design your website, update your SEO, ETC, and they are not an S-corp or C- corp you would issue them a 1099- NEC.
Do you have to have a contact? NO, this is just a way of saying that you agreed on a task and price, however they are not an employee because you did not provide set hours or specifications on how they must complete this task.
Do you have an affiliate program ? If you paid one of your affiliates more...
It finally happened, the ever-dreaded IRS audit. We knew that after 15 years in business it would happen sooner or later, but it just so happened to occur at the worst possible time.
We had just sold our house and everything was in storage. We changed out address but didn't have a mail box yet. Everything happened at once, and although I felt very unprepared and overwhelmed, I took it head on.
So, in case you have never been audited, this is how it goes:
You get a letter in the mail saying that you have 30 days to provide them with the information requested. In our case, they scheduled a phone call. Sometimes they request that you appear at their office or schedule a video chat. I thought this would be a breeze, but this is where what I learned what comes in to play.
1. When they ask you to explain your business, such as what do you make and sell or what services do you provide, list every single thing.
Why, you ask? Because when they go through the receipts and...