1099 Forms & Business Registration Due Soon
January 14th, 2020
We have two important reminders to prevent penalties:
The first reminder applies to you if you have paid any independent contractor $600 or more during 2019. If that is the case you must issue a Form 1099 to that individual by January 31, 2020. There is no requirement to issue Form 1099 to corporations.
If you submit Form 1099 within 30 days from the due date, the penalty is $30 per form. If you file the form more than 30 days late but before Aug. 1, the penalty is $60 per form. The penalty increases to $100 for any form filed after August.
If you would like us to send out Form 1099s we will need the payer’s name, address, and SSN or EIN. We will need the payee’s name, address, SSN or EIN and the amount paid to that independent contractor. Please contact Katheryn@taxplus.com or call 310.398.3231 for pricing.
The second reminder is that you must comply with the City of Los Angeles, Office of Finance annual Business Registration by 02/28/20 If you are doing business in Los Angeles as an independent contractor, self-employed, freelancer, sole proprietor, small business owner, partnership, fictitious business name (dba), loan-out co., LLC, or S-Corp. This includes self-employment or business operation with zero income, claiming business expenses.
When you are self-employed or operating a small business, you will have several (many) additional responsibilities. One of these responsibilities is to register and possibly pay taxes with the city or cities in which you do business. The City of Los Angeles, Office of Finance enforces that requirement for the County of Los Angeles. They issue a Business Tax Registration Certificate or “Business License” to those who are registered. Although this requirement is not new, in recent years the City of Los Angeles has started to enforce the registration and taxes militantly.
If you file timely you may qualify for the Small Business Tax Exemption for businesses with total gross income under $100,000, or the Creative Artist exemption for total gross income under $300,000 – but ONLY if you file before February 28, 2020! For other possible industry exemption amounts, please visit the City of Los Angeles, Office of Finance website or call 844.663.4411.
If you do not register for 2019 calendar year operation by the deadline you will pay taxes, interest and possibly penalties even if you were otherwise eligible for an exemption!
There are no Extensions: YOU MUST COMPLY with Business Registration by February 28, 2020!
The issues with the City of Los Angeles campaign to enforce city taxes are two-fold. First of all, when the city decided to enforce the law, they did not start with a public relations effort encouraging registration and compliance. They simply started sending DISCOVERY letters to self-employed individuals and small business owners based on information from the State of CA tax filings. Furthermore, these DISCOVERY letters go out as tax bills for estimated gross income based only on average industry revenues. Although the City of Los Angeles will allow you to correct the gross income figures, these DISCOVERY letters do not provide late relief from taxes or interest for those who would have otherwise qualified for the small business or creative artist exemptions. They will waive only the penalty portion of the bill upon your request.
The second issue with the City of Los Angeles campaign is that its filing due date of February 28 each year is unfair to many business owners who have federal and state filing deadlines after that date. The City of Los Angeles does not provide an option for extensions. After February 28, the registration is late and subject to tax and interest even though the business owner might otherwise be eligible for exemptions. By the time business owners meet with their tax preparers it could be too late to address the City of Los Angeles, Business Registration timely and qualify for the exemption. Although tax preparers could handle this registration or advise clients, we cannot take responsibility for the filing because we meet with many clients for tax preparation after February 28th. Even though tax preparers can try to advise clients ahead of time about the requirement, there are new clients that will miss the deadline because they engage our services after February 28th. Therefore, it becomes the client’s responsibility to handle this registration timely.
At your request for a flat $100 fee, we can help you comply with business registrations or respond to the City of Los Angeles, Office of Finance, the City of Santa Monica, Culver City, the City of San Diego, or any other city.
Contact Izaira@taxplus.com or call 310.398.3231 to help you comply.
200 N. Spring St, Room 101
Van Nuys Civic Center
6262 Van Nuys Blvd., Suite 110
West Los Angeles
1828 Sawtelle Blvd., Room 102
Please note that office locations do not have phone operators.