2012 was the year of the 1099-K. With the introduction of the form, the IRS sought to better track the earnings of online sellers. Despite their intentions last year, the form was sent out to business owners but that was the end of it. In 2013, things are getting serious. The IRS has announced they will be matching the 1099-K form numbers against what is submitted by the sellers on their tax returns. Anyone who has a discrepancy will be getting a much-dreaded letter from the IRS.
Given the newness of this process and its impact on small and micro businesses, Outright.com, a leading online bookkeeping software, offers features to make the 1099-K a breeze. Outright helps its current user base of 250,000 business owners track their income and expenses from a variety of sources including numerous ecommerce sales sites and payment processors.
As a first step to tackling the 1099-K, business owners should check if the form they received is indeed accurate. It's always wise to double check numbers in case of a discrepancy. Users can compare the figures on their 1099-K form against the numbers listed in Outright for a specific payment channel, e.g. PayPal. Once satisfied that all is indeed in order, an Outright user can then fill out their Schedule C form on the website itself, reconfirm the numbers match what is listed on the 1099-K, and mail the form to the IRS. Since in 2013 the Schedule C does not include a box for the 1099-K numbers, it is crucial to make sure the gross receipts amount the user lists in the form is not less than the 1099-K amount.
For people who have not yet used Outright, it is not too late. Customers can use Outright to pull together all of their expenses in one place, making it easier to complete their taxes. It is possible to import data from online sellers such as Amazon, eBay or processors like PayPal at any time and the imported transaction history dates back up to one year automatically. More data can also be uploaded manually.
Outright is committed to helping small businesses with their finances through changes in the business environment. "Change is the only constant," says CEO, Steven Aldrich. "The 1099-K is a new form and how doggedly the IRS pursues audits because of it is yet to be seen. But in this new year of increased scrutiny, it behooves us at Outright to help our users avoid skirmishes with the tax man and stay focused on what they do best – running their business."
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