What is a 1099?

You know that it has something to do with filing taxes, but what exactly is a 1099 Form? In short, a 1099 Form is an “information return” that reports all income earned through self-employment, interest and dividends, sales proceeds, and other miscellaneous income. There are several different types of 1099 Forms that account for the various types of income that’s earned throughout the year. As a small business owner, it’s easy to get lost in the hodgepodge of annual taxes and their procedures, but it’s necessary to know the basics in order to protect yourself and your business.

The 411 on the 1099

Let’s get down to the five Ws:

Who do I need to send a 1099 to?
The most common form that small businesses typically send out is the 1099-MISC. As a general rule, a 1099-MISC Form must be issued to anyone you’ve paid at least $600 to in professional services, rents, awards, or other income-related payments. However, unlike W-2s, 1099s are issued to contract workers, not full-time salaried employees. More on the different types of 1099s later.

What are the penalties for not issuing 1099 Forms?
As of 2016, small businesses that fail to issue 1099 Forms can result in penalties that range from $50 to $100 per form ($500,000 maximum per year), depending on how long past due the form is issued and how quickly the failure is corrected. If the issuing requirements are intentionally disregarded, the minimum penalty is $250 per form, with no maximum.

When do I need to issue 1099 Forms by?
Businesses need to send 1099s to all independent contractors by January 31. For filing information returns, all businesses need to meet the February 28 deadline. If you’re filing electronically, the deadline is extended to March 31.

Where can I get 1099 Forms?
You are required to use certified 1099 Forms that can be read by the IRS scanner. To obtain these forms, you can order them online from the IRS. You can also order them from certain office supply stores that provide authorized 1099s, or financial software can be used to create, send, and file 1099s. Be sure that you’re not downloading 1099-MISC Forms or sample forms from the IRS, as they are not permitted for use.

Why do I need to issue 1099s?
In order to avoid penalties and adhere to compliance laws, all small businesses need to properly issue and file 1099s. Be timely and be accurate. No one’s exempt from having to pay taxes, so it’s good practice to stay informed and follow federal requirements.

Prepare early for year-end tasks, and don’t scramble to meet deadlines. Set your business up for success by verifying that all employee and independent contractor information is accurate and that your financials are up-to-date.

If you’re like most people, you probably don’t want to deal with this at all. Bookkeepers can be a great resource around the 1099 process. Some bookkeepers (like BKE) will even do it all for you. Let us know if you’d like to [Schedule a Consultation].

1099 Form Variants

There are several variations of 1099 Forms, and it’s helpful to know which form to use for what purpose. The most common type is arguably the 1099-MISC, which covers an array of miscellaneous income for independent contractors. The 1099-INT Form summarizes interest income, while the 1099-DIV summarizes dividends and capital gains for the tax year. Then, there’s the 1099-B which summarizes income from all stock sales and barter transactions. Another common form is the 1099-K, which reports all credit card sales. This form is usually used for retail and online products, or if you’ve been selling items through online marketplaces like Amazon, eBay, or Etsy. There are scores of other 1099 forms that the IRS provides. Although many of them may not apply to how your small business operates, it’s a good idea to review the different types so you know that you’re filing correctly.

What else you need to know as a small business owner

As a small business owner, there are several perks in working with contractors. By using a 1099-MISC Form to pay for services, you’re essentially telling the IRS that the worker is not an employee. In doing so, you’re not obliged to provide certain employee taxes like Medicare and Social Security, as you normally would for a regular full-time employee.

If you’re using independent contractors for your small business, here’s what to ask for:

  1. Before starting anything, fill out a W-9 Form for each contractor, which includes their name, address, and Social Security number (SSN) or an employer identification number.

  2. Clearly define the relationship between you and the independent contractor. Make sure you have a contract that outlines exactly what the service agreement is, and allow them to perform the work with little to no supervision or interference.

  3. Steer clear of providing any benefit-type payments to the contractor. This includes health coverage, training, meals, or other perks.

  4. Request invoices for all services. Ensure that the invoices clearly depict the contractor’s name, business name, and bank details.

Although preparing and filing 1099s can be time-consuming, it is a necessary effort. Make sure to ask your bookkeeper or CPA about important deadlines for filing, and to confirm that you’re properly filing for your small business. Working with a bookkeeper can also ensure that all of your financials are accurately tracked throughout the year, which can significantly reduce headaches come tax time.

Why Small Businesses Should Care About Accounting Software

You’ve heard it time and time again: “Accurate bookkeeping is necessary for business health.” This isn’t meant to come off like a scolding finger-wag. Bookkeeping is simply a foundational aspect of running a business and should be regarded as such.

Bookkeeping and accounting are inherently different, though the two practices share similar implications. Accountants typically focus on preparing and processing statutory returns, giving advice on legal structures, and offering their expertise on general finances. Bookkeepers, on the other hand, tend to focus on maintaining financial organization, recording and reporting on business transactions, and providing detailed statements that reflect the health of a business. Bookkeepers have been expanding the scope of their expertise to include things like developing and reviewing internal business processes and employing other technologies like document management and inventory control to improve overall business efficiency as well. Bookkeepers also tend to have areas of specialization, which allows them to take more of a prescriptive approach when addressing your business needs.

When you work with a seasoned bookkeeper who knows the ins and outs of accounting software, you’re able to hand off the financial grind over to the pro and focus on doing what you do best – running your business. So, why should you care if your bookkeeper works with the latest accounting software technologies?

  1. You get excellent insight into cashflow.
    As a small business owner, your number one priority is cashflow. 96% of small businesses fail within 10 years because of financial illiteracy. Don’t become a statistic. Accounting software provides accurate visibility into the money coming in and out of your business. Your bookkeeper makes sure all transactions are properly sorted and reconciled, while taking other expenses like taxes, bills, and payroll into account to provide the most up-to-date numbers. Your bookkeeper can also advise on the best POS and payment systems that work for your business and provide even clearer insight into your total revenue. Working with a bookkeeper who can make sense of your cashflow not only sheds light on profit and margins, it allows for better business forecasting as well.

  2. World-class reporting makes you more business savvy.
    Financial reports give you a snapshot of your business health and progress. Accounting software that offers robust reporting capabilities informs your bookkeeper on your business financials. Perhaps you have specific questions regarding sales tax, inventory, or billable expenses. Or, maybe you need a quick cash summary. Accounting software allows your bookkeeper to customize reports, which makes it easier to get the answers you’re looking for. Additionally, real-time reporting lets your bookkeeper share exactly how your business is performing at any given time, so you don’t have to wait for monthly or quarterly financial reviews.

  3. Tight security keeps your financials safe.
    These days, the most sophisticated accounting software live in the cloud – and the benefits that come with that are clear. Your bookkeeper can access your financial information anywhere, anytime. The cloud tends to prompt questions about security, though. Bookkeepers know that accounting software should come with multiple layers of protection, data encryption, and secure storing. The best part about working with a bookkeeper who is proficient in using accounting software is that you can task them with figuring out the systems.

Think about what your top three business strengths are. Is bookkeeping one of them? What about cloud accounting software? If you’re like most small business owners, the answer is probably a timid “no,” and that’s okay. You know that proper bookkeeping isn’t something you can ignore, but you also know that your expertise lies elsewhere. On top of that, time is scarce and spending days or even weeks to learn accounting software sounds daunting. Why not hire a professional who employs the latest software technologies and knows your industry inside out to manage your financials for you?

Why Health & Wellness Businesses Need Automated Bookkeeping

As a health and wellness business professional, you’re a master at making sure your gym, spa, salon, or wellness center offers the best products and services. But when it comes to bookkeeping, do you see yourself as a Master or more like a Grasshopper?

Having full understanding of your financial health is non-negotiable if you want your business to prosper. Knowing the current state of your accounts not only allows you to get your books into shape, it provides insights into the successes (and failures) of your business efforts. Health and wellness businesses are focused on cashflow, hiring and maintaining good staff, tracking membership revenue, and improving overall business operations. Making sure your financial data is up to date, secure, and well-managed dramatically impacts how your business performs over time.

Employing cloud accounting software can be a game changer. What makes accounting software so powerful these days is that they integrate with other leading business apps, making the capabilities far more robust. It’s possible to manage your accounts, inventory, payroll, expenses, and reporting all in one place. Virtually every aspect of bookkeeping, tracking supplies, HR functions, invoicing and payments can be automated. When employed correctly, this technology eliminates the need for you to do manual data entry and improves overall accuracy and compliance.

Working with an expert – a bookkeeping master – who understands exactly how to employ and manage this technology can make you better-equipped to grow your health and wellness business. Outsourcing day-to-day bookkeeping tasks to a trusted advisor is now easier than ever, and can provide you with far better insight into your business. But what does that look like in practice?

What Automated Bookkeeping and Accounting Software Can Do For Your Health & Wellness Business

  1. Make sense of monthly bills
    Bills are unavoidable, but there’s a way to automate payments so there are fewer things you need to worry about each month. With cloud accounting software you can access all your bills and data on your mobile device, which means being able to approve bills on the go and make electronic payments with a single tap on the screen. If you use an integrated billing app, all of the data can be configured to automatically sync to your accounting software, eliminating the need for double data entry while allowing your bookkeeper to ensure that all of your bills and payments are properly filed.

  2. Manage your payroll reconciliation
    Being able to pay your employees on time is a key part of being a business owner. Whether your employees are W-2 staff, contract trainers, or part-time health specialists, they need to be properly set up and follow compliance laws for employment. Payroll software helps automate these processes. It can also sync with accounting software to allow your bookkeeper to accurately reconcile each pay run with your bank account, and track all reconciled expenses accordingly.

  3. Help you understand business performance
    Utilizing technology should always help, not hinder, your business processes. The point is to streamline mundane tasks so you can run your health and wellness business more efficiently. When employed and managed correctly, automated bookkeeping provides vital metrics for your business––the cash you have available now, cashflow projections, money paid and money owed, sales tax and payroll liabilities, and equity ratio. An expert bookkeeper can help translate these metrics into data trends, which leads to making more informed business decisions.

What is the Future of Bookkeeping for Health and Wellness Businesses?

By and large, technology is the force that leads progress and shapes the future. Bookkeeping is not immune to this force. When there are massive shifts in the way things are done, those who are adaptable typically persevere. In that same vein, if you can do more than adapt and figure out ways to make these changes work in your favor, that’s when the magic happens. It’s about embracing change, not just accommodating it.

It’s also about working smarter and knowing that as a business owner, there are certain things that you excel at and other things that may require outside help. When you can trust others and delegate specific tasks, you become a more efficient business owner. You can certainly make use of cloud accounting software to manage your own bookkeeping, but don’t you want more hours back in your day to get more clients, build your team, and run your business? Working with a bookkeeper who specializes in the health and wellness industry can provide additional security in knowing that your books are financially fit. It can also be the way you achieve holistic health for your business.

Finding the Right Bookkeeper for Your Business

Hiring a bookkeeper is about much more than finding someone who can crunch your numbers. It’s about finding a partner who not only understands your needs, but anticipates them to positively influence the direction of your business. No matter what size your business may be, it’s critical to keep tabs on transactions, sales records, expenses, and payroll to understand how your business is performing. So what goes into finding a bookkeeper that’s right for you? And why should you even hire one?

Why you need a bookkeeper

Before jumping into any kind of relationship, it’s important to assess the pros and cons. As a small business owner, it’s absolutely possible to manage your own books. But bookkeeping is typically not where entrepreneurs hold their expertise. There are a number of benefits that come from hiring a bookkeeper to take care of your financials for you. 

  1. Managing your cashflow
    Cashflow is the number one concern of all small business owners. Do you have a full sense of the money coming in and going out from all aspects of your business? A qualified bookkeeper not only keeps a close eye on your accounts, they’re able to employ the latest technologies to give you in-depth views on business performance. 
  2. Saving you time
    Reviewing receipts, payments, and expenses takes time. A lot of time – something that’s extremely precious to small business owners. When you’re able to trust a bookkeeper with your finances, you can dedicate your time and energy to growing your business. Understanding when and where you should ask for help can actually get you ahead. 
  3. Identifying your unique needs
    Each business has a unique set of needs when it comes to managing finances. Finding the right bookkeeper who understands the financial nuances of your particular industry is invaluable. Your bookkeeper can provide prescriptive recommendations and advice on how to improve business operations based on their understanding of the industry. 

Questions to ask your bookkeeper

Like any professional for hire, bookkeepers need to undergo a screening process to ensure a good fit. It’s easy to do an initial online search to get a snapshot of their credentials, but an in-person meeting is essential to confirm whether or not there’s enough chemistry to move things forward. Here are some questions to consider when finding a bookkeeper that’s right for your business:

  • “What is your experience with bookkeeping for my particular industry?”
    Here’s where you evaluate the scope of their industry knowledge. Do they know what specific things to look out for – like credit control, taxation laws, and payroll reconciliation? Ask detailed questions to get an understanding of how versed they are in your industry.
  • “What kind of accounting software do you use?”
    Qualified bookkeepers are skilled in technology applications. They understand that cloud accounting software streamlines bookkeeping functions and keeps your data secure. Get an idea of what kinds of technologies and applications they’re utilizing so you can get the most of our your partnership. 
  • “What do you do to stay on top of accounting and bookkeeping practices?”
    Bookkeeping is a business practice that’s as old as time, and the foundational aspects of accounting aren’t changing anytime soon. However, accounting software and other applications are transforming the way small businesses do business. Is your bookkeeper familiar with these time-saving apps and software?

Finding the right bookkeeper can empower you to run your business better. Partner with a bookkeeper who understands the financial framework of your business – someone who uses technology to help inform key business decisions. The positive relationship you build with your bookkeeper can be the difference between a business that simply operates and one that thrives. 

Eight Accounting Apps to Be a More Efficient Business Owner

As a small business owner, it’s important to learn how to work smarter, not harder. Assess what your day to day looks like. What aspects of your business are eating up most of your time? Which manual tasks can be simplified with technology? From accounting and bookkeeping to hiring and training employees, there’s a software or app that can reduce the time spent managing everyday business activities.

If you’re still relying on spreadsheets to stay up to date with your books, it’s time to rethink your approach. Simply put, accounting software transforms the way you do business. Furthermore, the top accounting platforms on the market today integrate with a variety of other business management applications, making it easier than ever to run all aspects of your business in one place. You can get improved visibility on cashflow, manage staff more effectively, and automate other key business processes.

Image via www.getapp.com.

Image via www.getapp.com.

Here are our top eight app recommendations to be a more efficient business owner

QuickBooks Online – QBO is widely received as one of the top accounting software for small businesses around the world. You can track your income and expenses, send invoices, and even pay your W-2 employees right from the platform. QBO also provides detailed reports, so you can see exactly how your business is performing in real time. A myriad of other robust features make QBO the choice accounting software for small businesses.

Xero – Xero is like the younger, hipper stepsister of QBO. Xero comes with the same bells and whistles QBO offers, but has a more pronounced focus on design. Born in the cloud, Xero makes it easy to access your financial information anywhere, anytime, on any device.

Receipt Bank – Receipt Bank is an automated bookkeeping software. You can significantly reduce the time spent sorting through bills, invoices, and receipts. This software allows you to take photos of documents and upload them to be automatically processed and filed. Receipt Bank saves you, or your bookkeeper, heaps of time by automating manual entry work, which means you’re able to spend more time actually taking care of your business.

Gusto – If cashflow is the number one concern of small business owners, managing payroll and employees is a close second. Gusto is reimagining how modern businesses take control of payroll, benefits, and HR. With Gusto, it’s incredibly simple to process local, state, and federal payroll taxes. You can even offer benefits, workers’ compensation, and a 401k plan through the platform. And because Gusto lives in the cloud, you can eliminate employee paperwork and view all of your employees’ details in one place.

ADP RUN – RUN is an HR and payroll management software that specializes in small businesses that have 10 or fewer employees. Cashflow will always be a priority. With HR and payroll software, you can gain more clarity on your payroll cash needs. The cool thing about RUN is that you can also manage your employees better. It keeps you on top of compliance issues, employees automatically get paid on time, and you can even get expert advice on how to deal with problem employees. Additionally, employees can log into the platform themselves to check paystub records, time off, and other details.

Bill.com – Bill.com simplifies business payments and works seamlessly with your accounting software. You can minimize the time spent on bill approvals and payments and easily collect your receivables with ACH (Automatic Clearing House network), credit cards, or PayPal. Bill.com removes the need for double data entry and offers electronic accounts payable and accounts receivable.

Expensify – Expensify is changing the game when it comes to expense reports. They’ve got a singular focus on automating everything – from submitting expenses to approving them and even delivering reimbursements next day. Every step is automated. It’s a clean and simple platform that removes the hassle of dealing with expense reports.

Hubdoc – Hubdoc is a file management software that allows you to import all your financial documents and export them into data you can use to improve your business. You can submit photos of receipts and paperwork and even forward emails from your inbox to be filed away. All of your documents are automatically entered as bookkeeping records.

When you let technology work for you, you’re taking charge of your productivity and working smarter. Accounting and business management software makes it easy to streamline all of your business processes. Cloud technology stores your business and employee information securely, and lets you access the information you need anywhere, anytime. And to top it off, all of these platforms are available on mobile, giving you more accessibility and freedom.

If you’re looking to make even better use of your time, work with a bookkeeper who understands exactly how to employ accounting and business software. That way, you can spend your days doing more of what you love and taking your business to new heights.

Accounting Reports: What is a Balance Sheet?

Keeping accurate and up-to-date accounting records is a critical part of being a business owner. Your books hold a wealth of information about the financial state of your business that you can use to make savvy decisions.

Accounting reports take the data stored in your books and present it in an easy-to-understand format. There are different types of reports that each serve an unique purpose. In this blog post, we’ll learn about the Balance Sheet.

What is a Balance Sheet?

A balance sheet provides insight into a business’s financial situation at a given time and is used to ensure the books are accurate. It consists of three sections: assets, liabilities, and the owners/shareholders equity.


An asset is anything owned by your business that has a monetary value. This section of the balance sheet will outline the value of each of your business’s assets. Some examples include:

  • Cash – The funds your business possesses, including the cash in your back account.

  • Accounts Receivable – Outstanding invoices your business is awaiting payment for.

  • Inventory – Items your business resells in its effort to generate revenue.

  • Equipment & supplies – Tangible items used in your business operations.

  • Reimbursable expenses – Expenses incurred by your business that will be paid back by another party.

  • Property – Building or land owned by your business and used in its operations.

  • Prepaid insurance – Current policies that have been fully paid for.

The purpose of this section is to calculate the total value of your business’s assets.


A liability is any debt owed by your business. The liability section of the balance sheet will include the total amount of debt your business owes. Some examples include:

  • Accounts Payable – Funds owed by your business to other parties, not including loans.

  • Taxes Payable – Money owed to the government for taxes.

  • Payroll Payable – Funds that are to be paid to employees for the wages they’ve earned.

  • Loans Payable – The balance of any loans from a bank or investor that needs to be paid back.

  • Credit Card Payable – The balance of any credit cards your business or employees use.

The purpose of this section is to calculate the total value of your business’s liabilities.

Owner/Shareholder Equity

Owner/shareholder equity is the value of assets that remain after the total value of liabilities has been deducted. It’s generally considered the source of the company’s assets. Some examples include:

  • Owner/Shareholder Capital – Investments made into the company. Including net income earned, minus withdrawals made.

  • Retained earnings – Net income that stays in the business, instead of being paid out in dividends or as payment to the owner.

What if your Balance Sheet doesn’t balance?

In the simplest terms, a balance sheet is Liabilities + Owner/Shareholder Equity = Assets. Like the name implies, this equation needs to balance in the end. If it doesn’t, you likely misrecorded a number, listed something in the wrong section, or left it off altogether. Here are some tips that can help you avoid mistakes:

  • Always review your entries for accuracy.

  • Make sure all withdrawals made by ownership are included in the equity section.

  • Use automated financial software to avoid human error.

  • Have a professional prepare your Balance Sheet.

Accounting reports shine a light on the different financial areas of your business. BookKeeping Express (BKE) can ensure your books are always updated and accurate and generate the financial reports you need to make smart business decisions. See how we can handle your bookkeeping needs so you can focus on what you do best.


Should You Hire a W-2 Employee or 1099 Contractor?


As your business grows, you’re going to need to hire good people to help out. But before you hire anyone, you’ll need to figure out what exactly their responsibilities will be, how long you’ll need to employ them, and what you can afford to pay them.

If you need to build a staff to help you run your business day in, and day out, then you will likely need to hire W-2 employees. But if you need short-term help for specific projects, you can hire a 1099 contractor instead.

The difference between employees and contractors

Contractors and employees are distinctly different. An employee works a fixed schedule and performs specific, recurring duties. They’re usually come to the place of business and are overseen by a manager while they work.

Contractors are often hired on a temporary basis to completely a project. They use their own tools and equipment and work on their own time, from their home or office. Contractors operate as an independent business and invoice for the work they perform.

One the biggest differences between employees and contractors is how income tax is withheld and paid. Businesses withhold taxes for their employees and issue W-2 forms at the end of the year. Contractors are expected to withhold and pay their own taxes and are issued a 1099 form at the end of the year by the different businesses they worked for.

The advantages of an employee

When your business needs extra hands, hiring an employee is often the most logical choice. There are many advantages to classifying a hire as a W-2 employee, including.

  • They learn how your business operates and to perform a wide range of tasks.

  • Their wages can be lower than a contractor since they’ll receive other benefits.

  • You know exactly when they’re available to work and have insight into how they’re performing.

  • They’re committed to your business since you’re most likely their only employer.

  • They have the desire to grow their career with your company.

The advantages of a contractor

Even though most businesses hire employees, there are certain situations when hiring a contractor is the better option. Temporarily hiring a contractor has specific advantages over hiring an employee, including:

  • They have specialized skills and can be counted on to complete complicated projects.

  • You can set a deadline for when the project needs to be completed and their employment will end.

  • You can determine a budget for their work so you know exactly how much their employment costs your business.

  • They can get right to work since they don’t require any training.

  • It can be easier to fire a contractor if they’re not working out.

What does your business need?

Whether you should hire a W-2 employee or 1099 contractor really depends on what your business needs. If you need help with different areas of your primary business operations, hiring an employee probably makes the most sense. But if you don’t know how to handle the other things that pop up, a contractor with the right skills can help.

You can also hire a contractor and offer them the opportunity to join as an employee if everything goes well. There are upsides and downsides to both employees and contractors so be sure to thoroughly consider your business needs so you can make the best choice.

If your business is growing, BookKeeping Express can be the perfect partner. We offer a wide range of financial services, including bookkeeping, expense management, payroll, and more. Discover all the different ways we can help you.