38: Understand How The 1099K May Impact Your Future Whether You Are Starting A Business, You Are Se
38: Understand How The 1099K May Impact Your Future Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Small Business Owner, Virtual Online Bookkeeper, Virtual Assistant Or VA
If your business involves selling items on amazon, eBay or your business accepts payments from credit cards, debit cards, or other third-party processors, you will more than likely receive a Form 1099K. Knowing what this form is and how it will impact your business is important to know. The rules for the 1099K are changing in 2022 and understanding these new rules as well as the impact it will have in your business is important. In today’s episode, I will be going over what all the hype is regarding the 1099K form so that you know exactly what to expect in the coming year and how it may impact your income tax return. I’ll even be covering what the difference is between the 1099 MISC, 1099 NEC and the 1099K so there is no confusion between the three of these forms. This episode is going to be helpful for you whether you are getting ready to start your small business, you’re a solopreneur, entrepreneur, small business owner, virtual online bookkeeper or virtual assistant and you accept any payments via credit card or debit card…
Grab Your FREE guide: 5 Essential Strategies For Stress-Free Bookkeeping:
Enrollment Is Open For My Elevate Your Bookkeeping Business Framework. If You Want To Create A Profitable Bookkeeping Business (Or Improve Your Existing Bookkeeping Business), Register Here:
Your FREE Online Virtual Bookkeeping Business Starter Guide is waiting for you:
Fill out the Contact Us form if you have a question or need help with your bookkeeping:
Sign up for a quick chat to see if starting a Virtual Online Bookkeeping Business is right for you:
Join Our Facebook Community: https://www.facebook.com/groups/womenbusinessownersultimatediybookkeepingboutique
QuickBooks Online - Save 50% Your First 3 Months:
If your business involves selling items on amazon, eBay or your business accepts payments from credit cards, debit cards, or other third-party processors, you will more than likely receive a Form 1099K.Knowing what this form is and how it will impact your business is important to know.The rules for the 1099K are changing in 2022 and understanding these new rules as well as the impact it will have in your business is important.In today’s episode, I will be going over what all the hype is regarding the 1099K form so that you know exactly what to expect in the coming year and how it may impact your tax return.I’ll even be covering what the difference is between the 1099 MISC, 1099 NEC and the 1099K so there is no confusion between the three of these forms.This episode is going to be helpful for you whether you are getting ready to start your small business, you’re a solopreneur, entrepreneur, small business owner, virtual online bookkeeper or virtual assistant and you accept any payments via credit card or debit card…
Welcome Back…The 1099K form may have been something you didn’t worry about too much even if you accepted payments via credit card, debit card or other third party processors in the past because of the thresholds, but in 2022, these rules will be changing and this will most likely cause you to receive a 1099K for your business if you are accepting payments via credit card, debit cards or third party processors.
So, first, I am going to fill you in with what exactly a 1099K form is all about. The 1099K form includes the gross amount of all reportable transactions. Reportable transactions currently include payments from payment card transactions including debit and credit cards as well as third party payment network transactions above the minimum reporting threshold of gross payments that exceed $20,000 AND have more than 200 transactions. You would receive a 1099K form from each payment settlement entity from which you received payments in settlement of reportable payment transactions. If you don’t meet these requirements, you would not be issued a 1099K form.
When you report your gross sales on your tax return, you would need to report all your gross sales including sales from cash, checks as well as debit and credit card payments and any third-party payment processors. The amount of gross transactions from your 1099K should be included in the amount of gross sales you are reporting on your tax return. You should verify that any 1099K forms you receive are accurate and you are reporting your gross sales correctly.
You might be thinking that this is all great information, but your business doesn’t receive over $20,000 and have more than 200 transactions, but this is exactly why I thought this would be a great topic for today’s podcast, because in 2022, the rules for the 1099K form will be changing and will impact many many more businesses. In 2022, the payee must be issued a 1099K form if the service processed more than $600 worth of payments, regardless of the number of individual payments or transactions. With this being said, does this change your perspective of how the 1099k form may impact your business? Does your business have more than $600 dollars’ worth of payments? If so, you can expect to receive a 1099K form at the end of 2022. These forms should be received by January 31st of the following year, and you would then want to make sure you look them over for accuracy and ensure any of this income is also included in the gross receipts you are reporting on your tax return.
Make sure that any payment processors that you are using have all the correct information for your business so that there are no questions when it comes to filing your tax return. Make sure that your name, address, phone number and tax identification numbers are correct.
Now that you understand what the 1099k form is all about, I want to also make sure you understand what the 1099 MISC and 1099 NEC forms are and how to make sure you are not duplicating any payments on these forms.
The 1099 MISC form was used to report any miscellaneous information. It is used to report miscellaneous compensation such as rents, prizes and awards just to mention a few. Prior to 2020, it was also used to report non-employee income. In 2020, the 1099 NEC came back for reporting any non-employee compensation. These forms were used to report any amounts of $600 or more. You will want to make sure that you don’t have any amounts entered on these forms that are also entered on a 1099K form. If there are transactions that are occurring through credit card or third-party processors, these transactions should be recorded on the 1099K form and not the 1099 MISC or 1099 NEC.
Why the change? There are thousands of gig economy workers who earn less than $20,000 in a year, which means they don’t currently receive a 1099K. This could mean that thousands of gig workers could be misreporting or underreporting their income. The American Rescue Plan Act lowers the threshold to help track these income amounts closer as a copy of the 1099K also goes to the IRS.
Understanding how the 1099K form works will help reduce your stress level at tax time. You can reduce your stress level even more by making sure to grab your copy of the 5 Essentials For Stress Free Bookkeeping. This guide is helpful whether you are doing your own bookkeeping for your business, or you are doing bookkeeping for multiple businesses. You can grab this free guide by going to https://www.financialadventure.com/5essentials ~ I’ll post a link where you are listening to this podcast so that you can make sure you are following these guidelines for stress free bookkeeping, and I want you to know that I am here for you if you ever need help with your bookkeeping, just let me know. You can contact me by going to www.FinancialAdventure.com/Contact-Us.
Alright, to recap this episode.
And, you know I’m going to ask…what’s at least one thing you will take away from this episode that will help your business succeed and grow your bottom line? If you need some accountability, join our PRIVATE Facebook community and post your action item, we’d love to support you.