January 24, 2025 • 17 mins
On this week's episode of Full Throttle Finance™️ we talked about the chaos of the new year in January from a bookkeepers perspective. We discussed essential tasks for business owners to wrap up 2024 and prepare for 2025, including transaction categorizations, bank reconciliations, and issuing tax forms like 1099s and W-2s. We touch on the importance of setting new business goals and share insights on classifying workers correctly to avoid IRS penalties.
Get ready to shift gears into the new year with us as we share hard-earned tips and rev up for financial success.👊✊💨
We really appreciate your support. Please like, comment, subscribe, leave us a rating, and join us next Friday ✌️
Link to course: https://fullthrottlefinance.mykajabi.com/offers/FFjAGD8L
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:08):
Hello everyone.
And welcome back to another episodeof Full Throttle Finance, a financial
literacy podcast that is geared towardsdissecting complex financial topics
into fun, relatable discussions.
I am Felicia and I am your CEO at CleanBee Consulting and with me is Allison,
who is our senior bookkeeper together.
We focus on revving up financialfoundations for athletes,
(00:29):
entrepreneurs, and leaders in business.
Regardless if you're operating froman established program already, or if
you're just starting out, we're hereto help you make small shifts that
drive better financial performance.
In case you missed our previousepisode, marked an exciting
milestone, the launch of our veryfirst full throttle finance course.
We shared the story behind why we're sopassionate about creating educational
(00:53):
resources tailored for motorsportprofessionals and enthusiasts.
It's been an incredible journey,combining 2 of our biggest passions,
finances and motorsports intosomething both fun and impactful.
We.
talked about what motivated usto bridge this unique gap and
how we're helping our audienceaccelerate their financial knowledge.
Felicia, would you like to startus off by letting us know what
(01:14):
we're going to discuss today?
Yeah.
Thanks, Allison.
Well, the end of January is rapidlyapproaching, which is a super
important month as a business owner.
So we thought it would be fun to giveyou an inside look at what the chaos of
January looks like from a bookkeeper'sperspective, especially if you are
(01:34):
DIYing, we're sure that a lot of youout there listening can relate with us.
We're all in this together.
Yeah.
And so January kind of sucksfor everyone who owns a
Yeah.
who's in finance expert, totallyfeel that we're all in the deeps
here though, I mean, Felicia andI are feeling extra loony this
year because we did the Cardinal.
We to onboard four new clients.
(01:58):
In the month of December andof January, cause we're crazy.
Plus we decided to put outan educational course, and
Extra crazy.
Yes.
Extra crazy.
Yay.
To say the least we are, we're tired, but,
We are.
for any business owners that areout there listening, can you talk
to them little bit about the thingsthey should be prepping for month in
(02:21):
for this month in order to wrap up2024, 2024 heading into the new year?
Yeah.
Alison.
There's a lot.
Right.
The first place that I recommend thatbusiness owners start is with the website.
Your transaction categorizationsand your bank reconciliations.
Hopefully,, you've been keeping up withyour transactions throughout the year.
So you probably have about onemonth's worth of transactions,
(02:44):
ideally, to catch up and clean up.
But regardless, you need toget them categorized ASAP.
You need your bookkeeping done.
Really, By last week, because of theQ4 federal tax payment that was due and
the deadline, it was due on 1 15 2025.
So, if you have not made your last paymentfor your 2024 taxes, then you have some
(03:08):
homework to do after this podcast episode.
you're welcome.
yeah.
You also need your bookkeeping completedbecause there's a chance that you
might also need to issue some tax formslike 1099s to contractors and service
providers by January 31st of this month.
So you still have a few days beforethat deadline if you're behind.
(03:30):
If you're in the weeds right now, , youneed to schedule time with your tax
preparer after you've categorized yourtransactions and after you've done your
reconciliations and really, you wantto try and get all of these things done
as soon as possible in January so thatyou can start to shift your focus to
your New Year goals and make sure thatyou're a step ahead of your competitors
new year, new me.
(03:51):
No, I guess that's not exactly what wewant to talk about as a business owner.
You should be setting new goalsmore and aligning your business
with what you want to achieve thisyear as a result of last year.
Felicia, why do you think it's importantto set new goals your business?
that's a great question, Allison.
And I think that this one kind of closelyaligns with objectives that you commonly
(04:15):
see in the motorsport world, right?
When you go out on track, you usuallyhave one or two goals at hand.
If you are racing, your goal is to win.
If you're not racing and you'retesting, your goal is to always
improve every single time that you'regoing out there and you're testing.
You're trying to get faster each time.
So the same applies with finance, right?
(04:35):
Winning.
is the equivalent of finishing the endof your year exactly where you planned
by managing your workflows and yourbudgets throughout the entire year.
The always improving aspect comes intoplay because you set goals for the
next year that are going to continueto help you grow your program and
you always improve by also makingadjustments to your own processes
(04:58):
along the way throughout the year.
To streamline, to make things moreefficient, to use your dollars better.
And you work towards these goals to, make sure that you stay on track to
finish Q4, exactly where you planned,which is back to goal number one, win.
So they're very closely relatedand setting new goals keeps you
(05:19):
from getting complacent, really.
And, you know, January can feellike a tug of war between closing
out your prior year and buildingmomentum for the future, right?
You've got your year end tasks likefinalizing your books, preparing tax
documents, reconciling your accounts,and at the same time you're really
still just trying to stay focusedon all of the new exciting goals and
(05:42):
things that you've got in play for 2025.
It's a lot.
month.
Yeah.
It's a lot.
And as a business owners ourselves, right?
We totally get it.
The stress is real, but here's the thing.
It's still important to stay ontrack with those year end tasks.
Getting them done now, it clearsthe path so that you can fully
(06:03):
focus on 2025 full speed ahead.
Exactly.
Felicia, you got, you nailed it.
And while it may feel like theseadministrative tasks are pulling you away
from your big picture, , they actuallyare helping you lay the foundation
for a smoother, more successful year.
organized and compliant now means you canavoid unnecessary roadblocks later on.
(06:25):
It's all about shifting your mindset.
There we go again, shifting your mindset.
Instead of viewing these tasks asdistractions or annoyance, think of
them as investments in your business.
future, which again is so, so niceto, to make it a more positive
outlook and here's the good news.
Once you've checked these itemsoff your list, you can give it your
(06:46):
full energy and creativity to those2025 goals that really light you up.
So
That's right, Allison.
And Remember, everyone, right?
It's okay to lean onsupport when you need it.
Whether it's your team, a trusted advisor,or professionals like Allison and I,
you don't have to carry the load alone.
(07:07):
Delegating or outsourcing some ofthese tasks can really free up a good
amount of your time so that you canstart focusing on what you do best.
Going fast around the racetrack.
So take a moment, take a deepbreath, try to stay organized,
and tackle one task at a time.
You've got this, and we'rehere to help you if you need
any guidance along the way.
(07:28):
totally agree.
And I'm going to shift gears a little bit.
So we, we talked about 10 99searlier and maybe for some people
that are listening, they aren'tsuper familiar with this tax form.
, do you want to talk a little aboutit and explain why it's important?
That's a great call, Allison.
So 1099s are IRS tax forms thatare used to report income that is
(07:51):
not from wages, salaries, or tips.
So it's not related to payroll,no payroll taxes are withheld.
Most commonly for business owners,this form is used to report payments
to independent contractors orfreelancers that you've hired, service
providers throughout the entire year.
So if you've paid a contractor 600or more during the year for services,
(08:15):
You might be required to send thema 1099 form at the end of the year,
depending upon how you paid them.
There's a lot of intricaciesto get down to whether or not
you need to issue that form.
But regardless, you still haveto go through those workflows
and a contractor can be a varietyof service based professionals.
Think the graphic designer who createdyour logo or the marketing consultant
(08:39):
who ran your ad campaign, or evenlike a freelance mechanic who helped
out with the team responsibilities.
If they're not an employee on your payrolland you pay them directly for their
services, then there's a good chancethat they're a good candidate for a 1099.
And you have obligations to the governmentto send this tax form as a business owner.
(09:00):
And it's not just the government.
Limited to creative professionalsor consultants either, right?
You would send a 1099 to your accountantor your bookkeepers, just like us who are
not part of your organization, your coachor your trainers that might work with your
team event organizers who might help with.
Manage events while you're out at thetrack, photographers, videographers,
(09:22):
social media managers, all of thesetypes of services, there's a possibility
that you might have to issue a 1099.
And, you know, there are avariety of different 1099 forms.
The most common one is called an NEC,which is a non employee compensation
because they're not an employee, they'renot going through payroll and there's
(09:42):
no payroll taxes withheld, right?
That's the most common, but there's alsovery specific forms that you have to send
out for rents paid, legal services paid,and interest payments that are made.
There's a lot under the 1099 bucket.
And unfortunately, we all just lovegiving money to the government,
(10:03):
but can you explain why filing?
This is so important.
I mean, other than obviouslyauditing, but, you know, can you
Yeah.
So the IRS uses these forms to ensurethat contractors are reporting their
income and failing to file theseas a business owner can lead to
penalties for your business, right?
(10:23):
So through payroll, the government knowswhat taxes are owed to them because
you're paying payroll taxes every singletime that you process your payroll.
But when you're paying an independentcontractor, they have no idea.
How much you paid them throughout theyear, so they don't know how much that
independent contractor should be owingto them throughout the year because
(10:45):
they also have to make quarterlyestimated tax payments as well, too.
So there might be filing fees thatyou have to pay out of pocket as a
business owner to process these forms.
It's the cost of doing business.
It is that, exactly.
But the good news is they are taxdeductible expenses, so save your
receipts and make sure that you categorizethose expenses accordingly in 2025 so
(11:09):
that you can take those deductions.
And let's be honest, right, yousaid it, nobody wants to deal with
penalties or audits, especially whenit is avoidable with proper planning.
So make sure you get them filedtimely if you don't want to pay.
Fees to the government.
It's just like, it's just like filingyour taxes at the end of the year.
Every year, you know, you,you know, you got to do it.
(11:31):
And at least if you're aware ofit, you can kind of plan for it.
It's a good practice to collect W 9forms from your contractors up front,
ideally before you pay for them, right?
Yeah, you're correct, Allison.
So, in case you are listening andyou don't know what a W 9 form is
either, it's another tax form thatyou're supposed to collect from an
(11:53):
independent contractor before youpay them so that you know what it is.
if you need to send them a 1099at the end of the year or not.
The W 9 will give you all of theinformation that you need as a
business owner to determine ifyou need to send them a 1099.
And so , getting this formahead of processing payment
is best practice, right?
(12:14):
Because people want to get paid.
They're more inclined togive you this Form, if it's a
contingency of them getting paid.
So that's why it's best practice ask forit ahead of time, before you get paid,
you are more, much more likely to getit pretty much immediately from asking
your independent contractors for it.
And, you know, you'll have all of theinformation that you need to put into your
(12:36):
accounting system to know if you need tosend them a 1099 at the end of the year.
And Felicia, not everycontractor receives a 1099 form.
For instance, if you paid a contractorvia credit card or through a third party
payment processor like PayPal or Stripe,you don't need to issue them a 1099.
Those payment platforms handlethe reporting through a different
form, the 1099 K, and it is issueddirectly from the processor to the
(13:00):
individual who received the payment.
Yep.
That's an important distinction, Allison.
So thanks for bringing that up.
And another point on that isthat you typically don't send
1099 s to corporations either.
So if the, you use like one of these.
third party payment processorsthat takes care of 1099s.
, if you pay them with a credit card,and if they're a corporation, like you
(13:22):
wouldn't send, you wouldn't send it 1099,but you wouldn't know any of that unless
you captured that W9 in the beginning.
Before you paid them, right?
So most C corporations andmost S corporations are
exempt from receiving 1099s.
Though there are exceptions, likeif a corporation provides legal
services, attorneys and law firmsoften receive 1099s regardless
(13:46):
of their business structure.
And that's such a good call out, Felicia.
And this is why Keeping yourrecords organized throughout
the year is so, so critical.
Collecting W 9 forms fromcontractors before you pay them.
That way, you have all thenecessary information ready
to go when it's time to file.
And business owners, don't forgetto get yours filed by 1 31 25.
(14:07):
So, the end of this month.
You gotta tell literallythe end of the month.
That's it.
And so, since we elaborated on 1099s,we should also talk about employee W
2 forms, which the W 2 is another taxform, but it's for the employee, and
it covers their wages, their tips, andany other compensation that they might
have received throughout the year.
(14:28):
And it also, covers the taxes thatare withheld from their paychecks.
And this is another tax formthat is due by 1/31 2025.
If you're managing employees, we highlyrecommend that you use a trusted payroll
processor, like Gusto, QuickBooks,Payroll, ADP, or Paychex, something along
those lines, because those services willhandle all of the payroll tax filings
(14:52):
and all of the employee W 2s and theemployer W 3 forms that are needed.
To make sure that you are hittingthe IRS deadline of getting
these tax forms issued by.
The 31st of January, every single year.
No, exactly.
And these systems are worth every pennybecause they take care of all the heavy
lifting from calculating withholdingsautomatically, filing a variety of
(15:15):
payroll tax forms on your behalf.
Plus they make it easy to trackemployee wages throughout the year.
We've got the, we've got a podcast pub.
Hello, puppy!
Hello!
If you're not set up with onecurrently or unhappy with your current
processor, we support businesses bycompleting payroll setups and kind of
, conversions at Clean Bee Consulting.
(15:35):
So reach out and we'll bemore than happy to help you.
Now, as you're getting in gearfor the new year, it's a perfect
time to make sure that you areclassifying your workers correctly.
And one of the biggest mistakesthat business owners make is
misclassifying employees asindependent contractors or vice versa.
(15:56):
And this is an Every industrythat we, we work with, right?
That's a mistake you definitelywant to try to avoid if possible.
Misclassifying workers can lead tohefty fines, penalties, and back taxes.
The IRS has very specific criteriain determining whether or not
somebody is a W 2 employee ora 1099 independent contractor.
(16:20):
You can't just.
Choose what's more convenientfor you as a business owner.
And we know that this can be tricky, whichis why we've actually dedicated an entire
section of our revving up for financialsuccess course to help business owners
understand worker classifications better.
You can purchase the course on our websiteunder the full throttle finance tab.
(16:42):
It'll have all the informationthat you need to get started in
understanding the difference betweenthese two different classifications.
And we've been so excitedabout our full throttle course.
Like we hope you guys really enjoy it.
And, We are enjoying this podcast as well.
Remember you can pick up our course,Revving Up For Financial Success on our
website, on the Full Throttle Finance tab.
(17:04):
We appreciate you tuning inand taking steps to strengthen
your financial foundations.
If you found today's insights valuable,be sure to subscribe and join us next
week, as we continue to break downfinances with a motor sport twist.
If you're interested in bookingservices with us directly.
cleanbeeconsulting.
com that's C L E A N B E E consulting.
(17:27):
com to schedule your consultation.
We'll see you next Friday.
Hello everyone.
And welcome back to another episodeof Full Throttle Finance, a financial
literacy podcast that is geared towardsdissecting complex financial topics
into fun, relatable discussions.
I am Felicia and I am your CEO at CleanBee Consulting and with me is Allison,
who is our senior bookkeeper together.
We focus on revving up financialfoundations for athletes,
(00:29):
entrepreneurs, and leaders in business.
Regardless if you're operating froman established program already, or if
you're just starting out, we're hereto help you make small shifts that
drive better financial performance.
In case you missed our previousepisode, marked an exciting
milestone, the launch of our veryfirst full throttle finance course.
We shared the story behind why we're sopassionate about creating educational
(00:53):
resources tailored for motorsportprofessionals and enthusiasts.
It's been an incredible journey,combining 2 of our biggest passions,
finances and motorsports intosomething both fun and impactful.
We.
talked about what motivated usto bridge this unique gap and
how we're helping our audienceaccelerate their financial knowledge.
Felicia, would you like to startus off by letting us know what
(01:14):
we're going to discuss today?
Yeah.
Thanks, Allison.
Well, the end of January is rapidlyapproaching, which is a super
important month as a business owner.
So we thought it would be fun to giveyou an inside look at what the chaos of
January looks like from a bookkeeper'sperspective, especially if you are
(01:34):
DIYing, we're sure that a lot of youout there listening can relate with us.
We're all in this together.
Yeah.
And so January kind of sucksfor everyone who owns a
Yeah.
who's in finance expert, totallyfeel that we're all in the deeps
here though, I mean, Felicia andI are feeling extra loony this
year because we did the Cardinal.
We to onboard four new clients.
(01:58):
In the month of December andof January, cause we're crazy.
Plus we decided to put outan educational course, and
Extra crazy.
Yes.
Extra crazy.
Yay.
To say the least we are, we're tired, but,
We are.
for any business owners that areout there listening, can you talk
to them little bit about the thingsthey should be prepping for month in
(02:21):
for this month in order to wrap up2024, 2024 heading into the new year?
Yeah.
Alison.
There's a lot.
Right.
The first place that I recommend thatbusiness owners start is with the website.
Your transaction categorizationsand your bank reconciliations.
Hopefully,, you've been keeping up withyour transactions throughout the year.
So you probably have about onemonth's worth of transactions,
(02:44):
ideally, to catch up and clean up.
But regardless, you need toget them categorized ASAP.
You need your bookkeeping done.
Really, By last week, because of theQ4 federal tax payment that was due and
the deadline, it was due on 1 15 2025.
So, if you have not made your last paymentfor your 2024 taxes, then you have some
(03:08):
homework to do after this podcast episode.
you're welcome.
yeah.
You also need your bookkeeping completedbecause there's a chance that you
might also need to issue some tax formslike 1099s to contractors and service
providers by January 31st of this month.
So you still have a few days beforethat deadline if you're behind.
(03:30):
If you're in the weeds right now, , youneed to schedule time with your tax
preparer after you've categorized yourtransactions and after you've done your
reconciliations and really, you wantto try and get all of these things done
as soon as possible in January so thatyou can start to shift your focus to
your New Year goals and make sure thatyou're a step ahead of your competitors
new year, new me.
(03:51):
No, I guess that's not exactly what wewant to talk about as a business owner.
You should be setting new goalsmore and aligning your business
with what you want to achieve thisyear as a result of last year.
Felicia, why do you think it's importantto set new goals your business?
that's a great question, Allison.
And I think that this one kind of closelyaligns with objectives that you commonly
(04:15):
see in the motorsport world, right?
When you go out on track, you usuallyhave one or two goals at hand.
If you are racing, your goal is to win.
If you're not racing and you'retesting, your goal is to always
improve every single time that you'regoing out there and you're testing.
You're trying to get faster each time.
So the same applies with finance, right?
(04:35):
Winning.
is the equivalent of finishing the endof your year exactly where you planned
by managing your workflows and yourbudgets throughout the entire year.
The always improving aspect comes intoplay because you set goals for the
next year that are going to continueto help you grow your program and
you always improve by also makingadjustments to your own processes
(04:58):
along the way throughout the year.
To streamline, to make things moreefficient, to use your dollars better.
And you work towards these goals to, make sure that you stay on track to
finish Q4, exactly where you planned,which is back to goal number one, win.
So they're very closely relatedand setting new goals keeps you
(05:19):
from getting complacent, really.
And, you know, January can feellike a tug of war between closing
out your prior year and buildingmomentum for the future, right?
You've got your year end tasks likefinalizing your books, preparing tax
documents, reconciling your accounts,and at the same time you're really
still just trying to stay focusedon all of the new exciting goals and
(05:42):
things that you've got in play for 2025.
It's a lot.
month.
Yeah.
It's a lot.
And as a business owners ourselves, right?
We totally get it.
The stress is real, but here's the thing.
It's still important to stay ontrack with those year end tasks.
Getting them done now, it clearsthe path so that you can fully
(06:03):
focus on 2025 full speed ahead.
Exactly.
Felicia, you got, you nailed it.
And while it may feel like theseadministrative tasks are pulling you away
from your big picture, , they actuallyare helping you lay the foundation
for a smoother, more successful year.
organized and compliant now means you canavoid unnecessary roadblocks later on.
(06:25):
It's all about shifting your mindset.
There we go again, shifting your mindset.
Instead of viewing these tasks asdistractions or annoyance, think of
them as investments in your business.
future, which again is so, so niceto, to make it a more positive
outlook and here's the good news.
Once you've checked these itemsoff your list, you can give it your
(06:46):
full energy and creativity to those2025 goals that really light you up.
So
That's right, Allison.
And Remember, everyone, right?
It's okay to lean onsupport when you need it.
Whether it's your team, a trusted advisor,or professionals like Allison and I,
you don't have to carry the load alone.
(07:07):
Delegating or outsourcing some ofthese tasks can really free up a good
amount of your time so that you canstart focusing on what you do best.
Going fast around the racetrack.
So take a moment, take a deepbreath, try to stay organized,
and tackle one task at a time.
You've got this, and we'rehere to help you if you need
any guidance along the way.
(07:28):
totally agree.
And I'm going to shift gears a little bit.
So we, we talked about 10 99searlier and maybe for some people
that are listening, they aren'tsuper familiar with this tax form.
, do you want to talk a little aboutit and explain why it's important?
That's a great call, Allison.
So 1099s are IRS tax forms thatare used to report income that is
(07:51):
not from wages, salaries, or tips.
So it's not related to payroll,no payroll taxes are withheld.
Most commonly for business owners,this form is used to report payments
to independent contractors orfreelancers that you've hired, service
providers throughout the entire year.
So if you've paid a contractor 600or more during the year for services,
(08:15):
You might be required to send thema 1099 form at the end of the year,
depending upon how you paid them.
There's a lot of intricaciesto get down to whether or not
you need to issue that form.
But regardless, you still haveto go through those workflows
and a contractor can be a varietyof service based professionals.
Think the graphic designer who createdyour logo or the marketing consultant
(08:39):
who ran your ad campaign, or evenlike a freelance mechanic who helped
out with the team responsibilities.
If they're not an employee on your payrolland you pay them directly for their
services, then there's a good chancethat they're a good candidate for a 1099.
And you have obligations to the governmentto send this tax form as a business owner.
(09:00):
And it's not just the government.
Limited to creative professionalsor consultants either, right?
You would send a 1099 to your accountantor your bookkeepers, just like us who are
not part of your organization, your coachor your trainers that might work with your
team event organizers who might help with.
Manage events while you're out at thetrack, photographers, videographers,
(09:22):
social media managers, all of thesetypes of services, there's a possibility
that you might have to issue a 1099.
And, you know, there are avariety of different 1099 forms.
The most common one is called an NEC,which is a non employee compensation
because they're not an employee, they'renot going through payroll and there's
(09:42):
no payroll taxes withheld, right?
That's the most common, but there's alsovery specific forms that you have to send
out for rents paid, legal services paid,and interest payments that are made.
There's a lot under the 1099 bucket.
And unfortunately, we all just lovegiving money to the government,
(10:03):
but can you explain why filing?
This is so important.
I mean, other than obviouslyauditing, but, you know, can you
Yeah.
So the IRS uses these forms to ensurethat contractors are reporting their
income and failing to file theseas a business owner can lead to
penalties for your business, right?
(10:23):
So through payroll, the government knowswhat taxes are owed to them because
you're paying payroll taxes every singletime that you process your payroll.
But when you're paying an independentcontractor, they have no idea.
How much you paid them throughout theyear, so they don't know how much that
independent contractor should be owingto them throughout the year because
(10:45):
they also have to make quarterlyestimated tax payments as well, too.
So there might be filing fees thatyou have to pay out of pocket as a
business owner to process these forms.
It's the cost of doing business.
It is that, exactly.
But the good news is they are taxdeductible expenses, so save your
receipts and make sure that you categorizethose expenses accordingly in 2025 so
(11:09):
that you can take those deductions.
And let's be honest, right, yousaid it, nobody wants to deal with
penalties or audits, especially whenit is avoidable with proper planning.
So make sure you get them filedtimely if you don't want to pay.
Fees to the government.
It's just like, it's just like filingyour taxes at the end of the year.
Every year, you know, you,you know, you got to do it.
(11:31):
And at least if you're aware ofit, you can kind of plan for it.
It's a good practice to collect W 9forms from your contractors up front,
ideally before you pay for them, right?
Yeah, you're correct, Allison.
So, in case you are listening andyou don't know what a W 9 form is
either, it's another tax form thatyou're supposed to collect from an
(11:53):
independent contractor before youpay them so that you know what it is.
if you need to send them a 1099at the end of the year or not.
The W 9 will give you all of theinformation that you need as a
business owner to determine ifyou need to send them a 1099.
And so , getting this formahead of processing payment
is best practice, right?
(12:14):
Because people want to get paid.
They're more inclined togive you this Form, if it's a
contingency of them getting paid.
So that's why it's best practice ask forit ahead of time, before you get paid,
you are more, much more likely to getit pretty much immediately from asking
your independent contractors for it.
And, you know, you'll have all of theinformation that you need to put into your
(12:36):
accounting system to know if you need tosend them a 1099 at the end of the year.
And Felicia, not everycontractor receives a 1099 form.
For instance, if you paid a contractorvia credit card or through a third party
payment processor like PayPal or Stripe,you don't need to issue them a 1099.
Those payment platforms handlethe reporting through a different
form, the 1099 K, and it is issueddirectly from the processor to the
(13:00):
individual who received the payment.
Yep.
That's an important distinction, Allison.
So thanks for bringing that up.
And another point on that isthat you typically don't send
1099 s to corporations either.
So if the, you use like one of these.
third party payment processorsthat takes care of 1099s.
, if you pay them with a credit card,and if they're a corporation, like you
(13:22):
wouldn't send, you wouldn't send it 1099,but you wouldn't know any of that unless
you captured that W9 in the beginning.
Before you paid them, right?
So most C corporations andmost S corporations are
exempt from receiving 1099s.
Though there are exceptions, likeif a corporation provides legal
services, attorneys and law firmsoften receive 1099s regardless
(13:46):
of their business structure.
And that's such a good call out, Felicia.
And this is why Keeping yourrecords organized throughout
the year is so, so critical.
Collecting W 9 forms fromcontractors before you pay them.
That way, you have all thenecessary information ready
to go when it's time to file.
And business owners, don't forgetto get yours filed by 1 31 25.
(14:07):
So, the end of this month.
You gotta tell literallythe end of the month.
That's it.
And so, since we elaborated on 1099s,we should also talk about employee W
2 forms, which the W 2 is another taxform, but it's for the employee, and
it covers their wages, their tips, andany other compensation that they might
have received throughout the year.
(14:28):
And it also, covers the taxes thatare withheld from their paychecks.
And this is another tax formthat is due by 1/31 2025.
If you're managing employees, we highlyrecommend that you use a trusted payroll
processor, like Gusto, QuickBooks,Payroll, ADP, or Paychex, something along
those lines, because those services willhandle all of the payroll tax filings
(14:52):
and all of the employee W 2s and theemployer W 3 forms that are needed.
To make sure that you are hittingthe IRS deadline of getting
these tax forms issued by.
The 31st of January, every single year.
No, exactly.
And these systems are worth every pennybecause they take care of all the heavy
lifting from calculating withholdingsautomatically, filing a variety of
(15:15):
payroll tax forms on your behalf.
Plus they make it easy to trackemployee wages throughout the year.
We've got the, we've got a podcast pub.
Hello, puppy!
Hello!
If you're not set up with onecurrently or unhappy with your current
processor, we support businesses bycompleting payroll setups and kind of
, conversions at Clean Bee Consulting.
(15:35):
So reach out and we'll bemore than happy to help you.
Now, as you're getting in gearfor the new year, it's a perfect
time to make sure that you areclassifying your workers correctly.
And one of the biggest mistakesthat business owners make is
misclassifying employees asindependent contractors or vice versa.
(15:56):
And this is an Every industrythat we, we work with, right?
That's a mistake you definitelywant to try to avoid if possible.
Misclassifying workers can lead tohefty fines, penalties, and back taxes.
The IRS has very specific criteriain determining whether or not
somebody is a W 2 employee ora 1099 independent contractor.
(16:20):
You can't just.
Choose what's more convenientfor you as a business owner.
And we know that this can be tricky, whichis why we've actually dedicated an entire
section of our revving up for financialsuccess course to help business owners
understand worker classifications better.
You can purchase the course on our websiteunder the full throttle finance tab.
(16:42):
It'll have all the informationthat you need to get started in
understanding the difference betweenthese two different classifications.
And we've been so excitedabout our full throttle course.
Like we hope you guys really enjoy it.
And, We are enjoying this podcast as well.
Remember you can pick up our course,Revving Up For Financial Success on our
website, on the Full Throttle Finance tab.
(17:04):
We appreciate you tuning inand taking steps to strengthen
your financial foundations.
If you found today's insights valuable,be sure to subscribe and join us next
week, as we continue to break downfinances with a motor sport twist.
If you're interested in bookingservices with us directly.
cleanbeeconsulting.
com that's C L E A N B E E consulting.
(17:27):
com to schedule your consultation.
We'll see you next Friday.
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