The IRS has increased the penalties associated with failure to file Form 1099 effective this tax filing year. You must issue a 1099-MISC to individuals, attorneys, vendors, subcontractors, and anyone else your company has paid more than $600 for services rendered in a given tax year. (Payments to most Corporations are exempt)

This requirement applies to:

Individuals
Partnerships
Most Limited Liability Companies (LLCs)

If you are dealing with a corporation you must obtain a W-9 from them if you are purchasing $600 in labor, services or materials. This protects you in case of audit as it proves they are exempt from 1099 filing.

The filing deadline for Copy B, sent to the vendor, is February 2, 2015. Copy A (along with Form 1096) is due to the IRS by March 2, 2015.

There is no penalty for obtaining the W-9 after services are rendered or materials purchased, but you must have it in hand by the time you file your annual return or you face up to $500,000.00 in penalties.

So, it's time to review your records and make sure you have the name, address, and tax ID number from each vendor. Click here for for Form W -9.