2023 Business Reporting Reminders Guide
As the year draws to a close, all businesses must meet the following reporting obligations:
- Form 1099-MISC and 1099-NEC
- S-Corporation Health Insurance
- Personal Use of Employer-Provided Vehicle
- Personal Property Tax and Business License Returns
Form 1099-MISC and 1099-NEC
There are several important items and key changes to consider for FORMS 1099-MISC/NEC, whether you prepare them yourself or you request WellsColeman prepare them for you.
Beginning in 2020, there was an update to how payments to vendors will be reported to the IRS which continues to be in effect.
- FORM 1099-MISC is used for rents and royalties.
- FORM 1099-NEC is used to report non-employee compensation.
Review your vendor lists and mark which vendors should receive a Form 1099-NEC or 1099-MISC. Here are the general rules:
- Any payee (other than a corporation) who is engaged in a trade or business and receives $600 or more in rents or other non-service-related income from you during the year should receive a Form 1099-MISC.
- Any payee (other than a corporation) who receives $600 or more from you for services should be issued a Form 1099-NEC instead of Form 1099-MISC.
- One common exception is payment made to attorneys. Attorneys should receive a Form 1099-NEC for services in excess of $600 regardless of whether or not they are incorporated.
Vendor setups must be complete with name, address, and federal identification number.
- Errors are common in this area and if the information does not match what the IRS has on record, a letter will be mailed requesting you to begin backup withholding from the payee. All vendors should complete a Form W-9 before any payment is made to ensure you have the correct information.
Forms 1099-NEC and 1099-MISC are due to recipients by January 31, 2024. Forms 1099-NEC and 1099-MISC are due to the IRS by February 28, 2024 if filing on paper, or March 31, 2024 if filing electronically.
- If WellsColeman prepares your Forms 1099-MISC/NEC and Form 1096, we need your information no later than January 22, 2024.
Watch those penalties!
- Failing to file information returns timely, failing to include all required information on the return, filing incorrect information such as an incorrect TIN or failing to report a TIN can result in sizable penalties. The amount of the penalty is based on how late the information return is filed.
S-corporation Health Insurance Reporting on Form W-2
Shareholders owning more than 2% interest in S-Corporations must include health insurance premiums for the shareholder and his/her family on the shareholder’s annual W-2.
- The premium amount is included in Box 1 (Federal Wages) and Box 14 (Other) but is not included in Social Security or Medicare wages.
- If you are using a payroll service provider, please notify them as soon as possible so they can advise you of the due dates for needed information.
- If WellsColeman provides your payroll support, please provide this information no later than December 15, 2023.
Personal Use of Employer-Provided Vehicle Reporting on Form W-2
Employers must report this taxable non-cash fringe benefit on the employee’s annual W-2. It is subject to Federal income tax, Social Security and Medicare tax, and FUTA tax.
- The value is based on the fair market value of the vehicle and is calculated using one of the following three methods: Annual Lease Value Rule, Cents-per-Mile Rule, or Commuting Rule.
- If you are using a payroll service provider, please notify them as soon as possible so they can advise you of their due dates for required information.
- If WellsColeman provides your payroll support, please provide this information no later than December 15, 2023.
Personal Property Tax and Business License Returns
Most localities require you to obtain a business license, renew it annually, and pay annual taxes on your business property located in that jurisdiction
- Not filing required returns or filing them late can result in additional penalties and interest.
- Fees to obtain and renew business licenses are typically based on the gross receipts you earned in that locality during the year. Property taxes are generally based on the value of your property located in that jurisdiction at the end of the year.
- The business license and personal property tax returns for most localities are due on March 1, 2024.
Virginia’s Pass-Through Entity Tax
If you want to take advantage and qualify for the pass-through entity tax, an electronic payment is required by December 31, 2023 in order to receive a federal deduction for the 2023 tax year. However, in order to avoid late payment penalties and interest, Virginia is requiring that you make all PTET related payments by December 15, 2023. (see Virginia Pass-Through Entity Tax in the 2023 Business Planning Guide)
If you have any questions on these requirements and reporting deadlines, please contact us.
Sincerely,
5004 Monument Ave
Richmond, VA 23230
T: 804.249.3328