Small business owners and freelancers are often staunch “gig economy” allies, enabling each other to thrive in competitive commercial landscapes and labor markets.
Organizations that can’t devote the funds for specialized talent or a little extra help can instead pay for the skills they need on an as-needed basis. Meanwhile, self-employed workers can attain a measure of flexibility in how earn a buck, picking up jobs that fit into their lifestyles and financial goals.
It can be a rewarding partnership that benefits both sides, that is, until tax time rolls around.
Instead of W-2 forms, freelancers and independent contractors are issued 1099 forms that detail their earnings for the year. Because freelancers typically don’t go through the same formalized onboarding process as employees and rarely interact with a company’s human resources department, gathering and maintaining the information required for filing 1099 forms can prove a daunting task.
Small businesses that don’t maintain good records run the risk of increased IRS scrutiny, not to mention raising the ire of trusted freelancers whose tax situations are complex enough without having to deal with delayed tax forms.
According to Intuit, the company behind the popular QuickBooks suite of accounting software and services, each year nearly a third (30 percent) of small businesses in the U.S. pay at least one freelancer. These businesses can sometimes forget to gather W-9 information from their contractors, meaning that they often resort to lengthy email chains or back-and-forth text chats to square away issues that arise.
On its surface, it may not seem like a big deal. Business matters are often addressed and put to rest over email or text, but both are less-than-secure ways of transmitting sensitive personal information. What’s more, users can introduce inaccuracies if they don’t carefully enter the new information into their accounting and tax solutions.
Using self-service capabilities that are usually found in enterprise-grade software products, Intuit’s QuickBooks Online is now making it easier for small businesses and their freelancers to get on the same page and make tax time a lot less, well, taxing for all involved.
“Small businesses and contractors have been working together since before the term ‘gig economy’ came into vogue,” Tad Milbourn, contractor ecosystem leader at Intuit, said. “Whether a contractor is working as a driver, a web designer or for a gig, these features allow them to get started more quickly and handle information more confidently than before.”
1099s Made Easy
QuickBooks Online users can now send freelancers an email invite containing a link to the QuickBooks portal. From there, recipients securely enter their information, and in the background, the system updates the contractor profile, ensuring that everyone’s data is in sync. As a bonus, if a freelancer scores a gig with another business that uses QuickBooks Online, they can share their information without having to re-enter it.
With that taken care of, small business owners can save some time and money on sending those 1099s.
After preparing a 1099 in QuickBooks, Intuit e-files them with the IRS. What’s new is that the company now prints and delivers a copy of the forms to independent contractors, meaning they no longer have to stuff envelopes and make a trip to the post office.
E-file rates start at $14.99 for the first three-form bundle. After that, customers pay $3.99 for each form up to 20 forms, and nothing extra for the 21st form and others following it.
Catch up on QuickBook’s latest 1099 tax form features for small businesses here.