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Accounting Features Tips & Advice

Filing 2020 1099-NEC Forms in Premier

For tax years prior to 2020, companies were required to file a 1099-MISC form for any nonemployee compensation paid out to subcontractors for any amount over $600. This year the Internal Revenue Service (IRS) has created a new form to be filed, the 1099-NEC which is specifically used for nonemployee compensation.

This article is designed to explain how Premier can streamline reporting, as well as provide updates on the new form implemented by the IRS.

What is Non-Employee Compensation? 

Per the IRS, if the four conditions are met, you likely will need to report payments as Non-Employee Compensation:

  1. You made a payment to someone who is not your employee.
  2. You made a payment for services in the normal course of your trade or business (including government agencies and non-profit organizations).
  3. You made the payment to an individual, partnership, estate, or a corporation.
  4. You made payments to the payee of at least $600 during the year.

What Changed from 2019 to 2020 ?

For the tax years starting after 2020, the IRS has decided to bring back form 1099-NEC. In tax years prior to 2020, the filing deadline for NEC on the 1099-MISC 2019 Form was still January 31, for any amounts in Box 7 which related to non-employee compensation. This has been done to streamline and simplify the process given the different dead lines for each form. Now all items which would have previously been reported in Box 7 of the 2019 1099-MISC will instead be recorded in Box 1 of the 1099-NEC.

Extensions for Form 1099-NEC reporting Nonemployee Compensation can only be requested as a non-automatic 30-day extension of time and must be filed on paper using Form 8809.

Is its important to note per the IRS publication, that the 1099-NEC form is not part of the Combined Federal/State Filing (CF/SF) Program. This means you must file a separate form directly with the state.  Form 1099-MISC can continue to be filed with the CF/SF Program.

Although the forms have changed, it is important to note both forms are intended for trade or business reporting only and not related to personal payments. The 1099-NEC is strictly for reporting independent contractor payments exceeding $600 in the year.

How Premier Streamlines Your Report

Premier has specialized forms that allow you to directly print on your IRS Submission forms! This saves you valuable time by automatically generating your 1099-NEC’s. In Premier, simply select the 2020 – 1099-NEC Default Form to print directly on the IRS Forms. In Premier, you are also able to print completed forms directly on blank paper for State tax department forms (Copy 1), recipient tax forms (Copy 2 to file with taxes and Copy B for records), and your own personal copy (Copy C). Premier allows you to automatically generate your annual information for each independent contractor including their address, tax identification number (TIN) and total non- employee compensation paid out, including applicable taxes.

Premier also has the capability to file online directly with the IRS! You are required to have  Please note if you have over 200 1099-NEC’s to file, you must efile your forms with the IRS.

What should be reported on 1099-NEC?

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Box 1 Non-Employee Compensation:

  • Must report payments to independent contractors
  • Payments for working interests for oil and gas payments
  • Prizes and awards for services performed by nonemployees
  • Termination payments to former self-employed insurance salespeople if certain criteria are not met (see IRS for details)
  • All payments made to a corporation that provides legal services i.e. the attorney fees must be reported (note settlement payments for contracts are to be included in 1099-MISC box 10)

When reporting taxes on 1099-NEC, it is important to note that if you have paid state or local taxes on the amounts paid to a nonemployee, the amounts you have paid must be included in Box 1.

Some examples from the IRS of what should be included in Box 1 include the following:

  • Professional service fees, such as fees to attorneys (including corporations), accountants, architects, contractors, engineers, etc.
  • Fees paid by one professional to another, such as fee-splitting or referral fees.
  • Payments by attorneys to witnesses or experts in legal adjudication.
  • Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service.
  • A fee paid to a nonemployee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer, if the fee and reimbursement total at least $600.
  • Exchanges of services between individuals in the course of their trades or businesses, such as a barter transaction.
  • Taxable fringe benefits for nonemployees, such as transit passes and parking passes which exceed $21 in a month. The value of parking may be excludable from an independent contractor’s gross income, and, therefore, not reportable on Form 1099-NEC if certain requirements are met

Box 4: Federal withholding taxes

For the majority of all 1099-NEC’s filed, this is may be non-applicable. There are only certain conditions that the IRS may mandate that withholding taxes be held back. The most likely scenario to occur which requires withholding is :

  • The recipient fails to provide their TIN to you
  • The IRS notifies you to impose backup withholding because the recipient provided an incorrect TIN

Box 5 to 7: State or local sales taxes

According to the IRS, these boxes are provided for your convenience and do not need to be completed.

Who is responsible to file?

If you make a payment on behalf of another person using their funds, you may be responsible for filing Form 1099-NEC.  In addition, if you make payments directly and even if you provide management oversight for the issuance of payments you are responsible for filing information returns for payments of $600 or more paid to contractors. Please note, if the independent contractor is registered as a C corporation or S corporation, a 1099-NEC will not be required.

IRS Deadlines

It is important to note the filing deadlines differ between the two forms. The deadline to file Form 1099-NEC using either paper or electronic filing with the IRS is on or before February 1, 2021 (note January 31, 2021 is a Sunday).

However, this is different for Form 1099-MISC. Paper filings for 1099-MISC must by filed by March 1, 2021 (note February 28, 2021 is a Sunday), but electronic filings must be completed on or before March 31, 2021.

Deadlines for Statement to Recipients

Regardless of whether you are filing Form 1099-NEC or 1099-MISC, all recipients must be provided their copy of their respective form by January 31. One exception is amounts reported in Box 8 or 14 of  Form 1099-MISC are due by February 15.

For detailed instructions please visit the IRS site for Instructions for Forms 1099-MISC and 1099-NEC (2020).

To learn more about Premier Construction Software can help you streamline your business, schedule a free demonstration with our sales team here

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Features Tips & Advice

How to manage RFIs to increase the success of your construction projects

We have all heard the saying time is money. This especially holds true in the construction industry where one small setback has the ability to derail an entire project off course, both financially and time wise.

Requests for information, or more commonly known as RFIs, are more than just inquiries about a current project. They are a formal written process that documents the clarification of plans, drawings, specifications and agreements between contractors, designer, supplier, subcontractors etc. It can be used to discuss construction items, timing and schedule, design change or clarification, change in process, omissions in specs or plans, material change, value engineering, utility conflict and or any other issues.

RFIs are a project management tracking tool to keep all these documents traced and recorded for both legal and organizational purposes so you can build correctly and deliver high-quality projects on time and on budget.

However, when it comes to managing RFIs, many construction businesses struggle to do so effectively. There can be hundreds of pending RFIs and if there isn’t a process in place to manage them, information might be missed, or documents might end up lost.

With the help of construction management software, this process has become a lot easier for construction businesses to control. To fully optimize your process, here are a few best practices to keep in mind.

Best practices for sending an RFI in construction management software

  • Before sending an RFI, you should be able to answer the 5 W’s & H.
    • Who will be impacted and who should be involved?
    • What is the issue and what tasks must be completed?
    • Where on the job site/drawings/is the budget impacted?
    • Why is this important- is there a time, cost or legal implication?
    • When is the response required and when are the impacted parties to be informed by?
    • How will the issue be resolved? How are you proposing it be resolved? How does this impact the job? Is there a change order, budget transfer etc.
  • Provide enough detail. If there is not enough information this can cause confusion and delay the project, as more time will be required for clarification. Avoid vague and generic comments and clearly identify the issue or inquiry that must be resolved. Provide some background information but ensure you only include relevant facts that pertain to the question you have asked.
  • Provide relevant documentation such as images, drawings or other documentation. Do not include unnecessary documents or information as this can confuse the recipient.
  • To avoid further delays, send requests as soon as you discover the need for additional information so this way, you have all the supporting documents. 
  • Limit each RFI to 1 topic. This will prevent questions from slipping through the cracks. If there is information overload and too many topics in the RFI there is a risk that no answer will be received and the project could become delayed.
  • When choosing recipients to include, ensure you are not including the wrong person. Only those who are directly involved should be included. This means anyone who was not involved or will not be impacted by the request should be excluded to avoid confusion.

There may be scenarios when you receive an RFI such as when you’re working with subcontractors. It’s important that you also respond accordingly to ensure there are no confusions or delays.

Tips for responding to RFIs in construction project management software

  • Always provide a definitive response and leave nothing to interpretation. When multiple options are presented there is a risk that different approaches will be followed by multiple recipients. Clearly state your recommendation I.e. use clear verbiage such as “We will paint the room blue”, instead of “We can paint the room red or blue. I like blue”.
  • Do not guess at what the issuer is trying to ask. Ensure you research the issue or ask relevant questions via a documented email. Verbal conversations are okay, but bear in mind paper trails such as emails between recipients can hold more credibility in case of a dispute.
  • Respond in a timely fashion. The rule of thumb is to respond back within a week. The longer the questions go unanswered, the bigger chance of delay.

Managing RFIs in Premier Construction Software

subcontractor completing an RFI using Premier's RFI request portalPremier Construction Software makes it easier than ever for construction companies to manage RFIs all from one platform.  Premier allows you to create RFIs, track responses, and view all applicable RFI’s for specific jobs.

By sending emails directly from the software, Premier helps minimize the no-response rate which is a likely cause of disputes in contracts. You can efficiently and conveniently track who you have received responses from and send reminder emails to those who have not. The system will automatically update the status of the RFI once the user responds. Users also have the option to manually add responses that could have taken place verbally over the phone. 

Premier also offers the flexibility to attach documents and drawings to RFIs. This ensures everyone involved has the information required to effectively make a decision and no documents are lost. For a quick audit on the status of all RFIs, users can easily generate reports for different jobs to review outstanding responses, and address pending items as quickly as possible to help avoid delays.

To learn more about Premier Construction Software and how it can improve your RFI process, get in touch with us today.

Categories
Features

Stay Organized with Document Management

To be organized in business is to take forward previous experiences; to anticipate the unexpected; and to be prepared for what is to come. It’s no secret that this is also a recipe for success. To be organized may not guarantee success, but it makes achieving it much more attainable.

In construction, organization means having everything you need from contracts, drawings, emails, photos, compliances and even receipts when and where you need them, no matter the job site.

Whether building from the ground-up, or interior builds, a construction firm requires so much more than just the tools of the trade to be successful. It requires an organizational system that keeps everything from administrative documents to inspection reports, customer reports, invoices, contracts, change orders, estimates and so much more, in one place that can be accessed anywhere, at any time – in the office or on any given job site – via the Internet.

This integral document management system is available with the Premier Construction Software.

 

Fast and at Your Fingertips

For MAX Construction Inc., a full-service tenant finish general contractor company in Denver, CO, Premier’s document management has become a primary tool in day-to-day operations and a “one stop shop for all company data”.

Alex Szollosi, President of MAX Construction, has developed a complete system of 24 folders per project that ensures all files are ready when required—before, during and after a project—using Premier’s document management system.

The document management folder, what I like about it, is that it offers us the ability to store everything on the job in one location. We are using one product and we are finding everything we need – whether it’s accounting or project management.

Equally as important as ensuring that PM’s have real-time reports, Premier’s document management provides immediate access to anything required for a project, and even date stamps and tracks full version control.

“The flexibility of being able to create your own folders makes it one of my favorite features. The unlimited storage is not offered by many competitors”.

 

Efficiency & Focus

Staying organized is key to the success of a job. So is staying focused. Being able to access files wherever and whenever, from any device keeps projects moving forward. Things do not get held up because you’re waiting on paperwork, approvals or signatures. Everything is automated and real-time. All documents generated from Premier automatically tag and index saving you time. Users can easily drag and drop any outside documents including legal, HR, certifications, resume, emails, bids etc. Best of all, you can secure folders and share any documents with external users such as customers or investors.

It’s a product that any contractor who has a lot of work would want to use because they don’t have to go searching through file cabinets, or run down to storage lockers for drawings to have to reactivate a job. With Premier I have all that information in front of me.

Centralize all of your company’s content. Make it available anytime, on any device. And have unlimited use and storage. That’s what the document management feature in Premier Construction Software provides. And that — is a recipe for success.

 

For more information on Premier Construction Software and to speak to a representative, click here.