If you’ve been running a small business, you’re probably aware of the benefits of using PayPal or another e-payment service. One of the biggest perks is that you don’t need to give contractors and vendors 1099 tax reports and can push that responsibility off onto PayPal.
The problem? Some business owners were using this to cheat the system and avoid reporting the income to the IRS altogether. As you might imagine, lawmakers weren’t too happy about this.
In order to get this benefit of using e-payment services, businesses need to earn more than $20,000 per year (gross income) and have more than 200 transactions. However, those criteria are being replaced.
As of the beginning of 2022, you’ll need to start providing your vendors and contractors with 1099 reporting if your business earns $600 or more. Yep, that’s all—$600.
Some states have already implemented this change or made other adjustments, but Minnesota and Florida haven’t made any updates and might not until January 1st.
These types of rule changes can be complex and frustrating to keep track of when you’re trying to run a business. If you need help getting your business ready for these changes, we can help!
Get Your Small Business Tax Services Consultation
Integrated Accounting & Tax is a woman-owned accounting firm with services tailored to each client’s unique needs and goals. We guarantee that every service we provide is essential and propels your goal.
Contact us today for a free business accounting and tax services consultation. We have locations in Prior Lake, MN, and Ft. Lauderdale, FL, and can provide service to surrounding areas.