Signing up sales reps

Re: [spiers] Signing up sales reps

Hi, Don,

My wife has a sales rep business serving independent gift stores in Idaho.
About a third of the 40 or so lines she represents send her a 1099 misc
(received most of them in the past few days, as Jan. 31 is the deadline for
folks to mail them out.) I think there are a couple issues, if I remember my
bookkeeping and tax accounting from back a few years:

A) If the person (rep) is genuinely in business and reporting all their
income, there is not a real problem. The kicker comes if someone is not
really registered as a business, and is hiding the commission sales under
the IRS and other taxing authority radar. A 1099 misc is recommended if
there is any doubt.

B) I think there used to be a financial threshold, e.g. $600, where below
that you are not required to file a 1099 misc for someone. (But I may have
confused that with a different regulation.)

As a practical matter, most of the larger gift and souvenir companies we rep
for, automatically put out 1099-misc as a measure of protection against
ambiguous IRS regulations and auditor personalities, regardless of the
dollar amount of the annual commissions. Many of the smaller, newer,
mom-and-pop type of operations do not send them out, I think largely due to
lack of knowledge about the issue, and/or not having a close relationship
with a (paranoid) accountant.

This segmentation of "1099 behavior" between larger established companies
and smaller newer companies is information in and of itself, in my opinion.

And as John says, your best information should come from a good accountant
who is up on the latest rules and regs on the issue.

Malcolm Dell

----- Original Message -----
From: "DL"
To:
Sent: Wednesday, February 02, 2005 3:03 PM
Subject: Re: [spiers] Signing up sales reps


>
> How is it normally done in the import industry with independent sales
> reps? John, how did you do it when you were working with sales reps?
>
> Thanks,
> -don
>
> wileyccc@aol.com wrote:
> Hello John and friends,
>
> When signing up independent sales reps, do I need the sales reps to fill
> out a W9 tax form for reporting sales rep earnings and send a 1099 MISC to
> the reps at the end of the year?
>
> Thanks,
>
> This is a good question for your CPA, and certainly however your rep wants
> to handle it...
>
> John

Bookmark this post --- Email this post