I have a customer that buys chocolates from me to give away in her welcome packages ( it's a vaca-rental co.) and she says she needs to 1099 me. is that correct? Although we have done business for 8 months or so we don't have a contract , I bill her with state tax added and that's it. She buys for the business and also for personal gifts etc... one friend with a business says she had never been 1099'd in 8 years so I'm kind of searching for a little more feedback. Online I have seen that certain merchandise is exempt .... but I've also seen that over $600 isn't... any comments?
I don't think you should be 1099'd. I don't 1099 the company we buy packaging from. I don't 1099 the grocery store, nor the company we buy chocolate from. Nor does my day job (Finance) 1099 my chocolate company for the chocolates we send out to clients. We just have the invoice as documentation and move on.
I don't think it would matter if she 1099's you because the sales would show up in your profit and loss statement anyway. It is rather odd though. Perhaps she should seek professional help. :)
exactly what I was thinking Larry ... thanks !
A couple of thoughts:
1) This is a question for your accountant.
2) 1099's are usually (but not always) issued to people, not corporations. If your company is incorporated, and she paid your company, she probably doesn't need to give you a 1099. If your company is not incorporated, and she paid YOU, then she probably does.
3) If you're supposed to issue someone a 1099 and you don't, you can be fined by the IRS. I don't know how often this actually happens (not often I think), but your customer may be concerned about that.
4) If someone issues you a 1099 you don't need, it doesn't hurt you in any way. Just give it to your accountant.
5) See #1
"my Accountant" ... that would be me :) I've only been operating 8 months. All the points you mentioned , Michael , I am aware of.
I am not contracted to make chocolates for her .
I since have found this on the IRS site
"The IRS instructions for the 1099-MISC form state specifically that you do not have to provide a 1099 to suppliers of " merchandise, telegrams, telephone, freight, storage, and similar items." Corporations are also exempt from 1099 requirements, with the exception of corporations you pay for medical or health care, or law firms that you've hired for legal services. You also don't have to submit 1099s for payments to tax-exempt organizations or to American or foreign governments."
Problem solved... no 1099 ... thanks!