Getting Ready for Year-End Accounting: 1099 Contractor Review, Payroll Checks, and Compliance Tips

I know you’re probably feeling that familiar knot in your stomach as we approach year-end. The thought of 1099s, payroll compliance, and all those numbers that need to add up perfectly can be overwhelming. Trust me, I’ve seen business owners lose sleep over this stuff, and I want you to know that you’re not alone in feeling anxious about it.

The good news? With some preparation and the right approach, year-end accounting doesn’t have to be a nightmare. We can break this down into manageable pieces, and I’ll walk you through exactly what needs to happen with your 1099 contractors, payroll reviews, and compliance checks.

Taking Stock of Your 1099 Contractors

Let’s start with the big one that trips up so many businesses, your independent contractors. If you’ve paid any contractor $600 or more during the year, you’re required to file a Form 1099-NEC and get a copy to them by January 31st. Miss this deadline, and you’re looking at IRS penalties that can range from $50 to $270 per form.

Here’s what we need to review together:

• Every contractor payment you made this year
• Whether any contractor hit that $600 threshold
• Current contact information for all contractors
• Tax ID numbers or Social Security numbers on file

I can’t tell you how many times I’ve seen businesses scramble because they didn’t track contractor payments throughout the year. We’re often digging through bank statements and receipts trying to piece together who got paid what. It’s stressful for everyone involved.

The smart approach is to organize everything now:

• Gather all contractor invoices and payment records
• Verify that names, addresses, and tax ID numbers match what you have on file
• Double-check that the information matches IRS records (incorrect info leads to rejected filings)
• Create a master list showing total payments to each contractor

When you work with me, we set up systems that track this information automatically throughout the year. No more year-end surprises or frantic searches through paperwork.

Getting Ready to Print and Mail Your 1099s

Once we’ve identified who needs a 1099, the next step is actually getting them prepared, printed, and mailed. This might sound straightforward, but there are some important details that can save you headaches.

We need to handle several things:

• Order the correct 1099-NEC forms (not the old 1099-MISC)
• Ensure your business information is accurate on all forms
• Triple-check contractor details before printing
• Plan for mailing to meet the January 31st deadline

The IRS has specific requirements for 1099 forms. You can’t just print them on regular paper, they need to be on official forms that can be scanned properly. I always recommend ordering a few extra forms because mistakes happen, and you don’t want to be stuck waiting for new forms to arrive when you’re up against the deadline.

Here’s my typical timeline for clients:

• December: Finalize contractor list and verify information
• Early January: Prepare and review all forms
• Mid-January: Print, sign, and mail forms
• End of January: File copies with the IRS

This gives us a buffer for any issues that come up. And trust me, something always comes up.

Reviewing Your Payroll Numbers and Compliance

Now let’s talk about payroll: another area where small mistakes can turn into big problems. Year-end is when we need to make sure everything balances and that you’ve been compliant with all the various tax requirements throughout the year.

We start by reconciling your payroll records:

• Compare your year-to-date payroll data with your books
• Verify that gross wages match across all systems
• Check that tax withholdings equal what you actually sent to the IRS
• Review all bonuses, benefits, and other compensation

I’ve seen situations where businesses thought they were current on payroll taxes, only to discover during year-end review that they’d been miscalculating or missing payments. It’s always better to catch these issues now rather than during a payroll tax audit.

Employee information needs to be spot-on:

• Social Security numbers must match IRS records
• Names and addresses need to be current
• Any mid-year changes should be properly documented

Don’t forget about those year-end bonuses and final paychecks:

• Process any holiday bonuses or year-end compensation
• Calculate final paychecks accurately
• Adjust payroll records for any additional payments

One common mistake I see is when companies process year-end bonuses but forget to update their payroll systems. This creates a mismatch between what shows on W-2 forms and what’s in the books.

Making Sure You’re Compliant

Compliance isn’t just about filing the right forms: it’s about making sure you’ve met all your obligations throughout the year. This is where having someone who knows the rules can really save you from expensive mistakes.

Federal payroll tax requirements include:

• Federal income taxes withheld from employee wages
• Social Security and Medicare taxes (both employer and employee portions)
• Federal unemployment taxes
• State unemployment taxes (varies by state)

Each of these has different payment schedules and reporting requirements. Missing a deadline or miscalculating an amount can trigger penalties and interest charges that add up quickly.

Key forms you’ll be dealing with:

• Form 941 for quarterly payroll tax reporting
• Form 940 for federal unemployment tax
• W-2 forms for all employees (due January 31st)
• 1099-NEC forms for contractors (also due January 31st)

I always tell my clients that compliance is like preventive maintenance on your car. You can skip it for a while, but eventually, it’s going to cost you a lot more than if you’d just stayed current.

Why This Matters More Than You Think

Look, I get it. Year-end accounting feels like a necessary evil that takes time away from running your business. But getting this right isn’t just about avoiding penalties: it’s about having accurate financial information that helps you make better decisions.

When your books are clean and compliant, you can:

• Confidently prepare for tax season
• Make informed business decisions based on accurate data
• Sleep better knowing you’re not going to get surprised by the IRS
• Focus on growing your business instead of worrying about compliance

We tailor our year-end services based on what you need:

• Full-service year-end cleanup and preparation
• Contractor and payroll review only
• Compliance checking and filing assistance
• Ongoing support to prevent future issues

Everyone doesn’t need every type of service, and we work with you to figure out what makes the most sense for your situation.

Is It Time For A Change?

If you currently don’t have anyone helping you with all your bookkeeping needs, or perhaps you are not confident in your numbers, perhaps we can have a conversation in person (or online).  PRIOR to the beginning of a new year is a good time to make a change.  We can help.  Early November (or earlier) is a good time to meet and go over the details on any upcoming changes.  It takes some time to make it all happen easily and effectively.  We can also discuss any reviews, reconciliations, transitions or updates that might need to be done ahead of time.

Let’s Work Through This Together

I know this feels overwhelming, especially if you’re trying to handle it all yourself while running your business. That’s exactly why we’re here. We’ve helped hundreds of businesses get through year-end successfully, and we can help you too.

When we work together, I take care of the details so you can focus on what you do best: running your business. We’ll review everything systematically, catch any issues early, and make sure you’re fully compliant and ready for tax season.

Your privacy is our priority throughout this process. We never share your information without your approval, and everything we do together will be spelled out clearly in our engagement letter.

Ready to get started? Let’s begin with a phone call to discuss your specific situation. Just call us at (360) 334-3373, and we’ll schedule a time to review where you are and what needs to happen next.

We have lots of ways to work together, and we’ll customize our approach based on your needs. You’re only committed for as long as you want to continue, and we’re always there for you if questions come up later.

Don’t let year-end accounting stress keep you up at night. We can handle this together, and I promise it doesn’t have to be as scary as it seems right now.