1099 For Cakes?

Business By sleepy20520 Updated 15 Nov 2011 , 7:13am by ALENCON9

sleepy20520 Posted 11 Nov 2011 , 6:17pm
post #1 of 15

So i am just now thinking about making my business a real business, instead of just for family/friends. Anyways, if i sell a large amount to lets say a company for a Christmas party, do they send me a 1099 the next year for that purchase? The reason i ask is because i know if a bride buys a cake from me for her wedding, she certainly doesn't send me a 1099...so whats the difference? i wouldn't be a contractor for the company and im not really providing a service but a Christmas cake (or whatever)....so i guess i just dont get the difference? or if id even get a 1099????
any help? icon_smile.gif

14 replies
Mb20fan Posted 11 Nov 2011 , 6:49pm
post #2 of 15

Perhaps if a company purchases a cake or whatever from you, they intend to somehow write it off as an office offense. ???

jason_kraft Posted 11 Nov 2011 , 6:56pm
post #3 of 15

Starting in 2012, all businesses will be required to issue 1099s for orders over $600 if paid by check or cash. This means that if you sell a >$600 cake to a business they would need to send you a 1099, and if your business buys >$600 worth of cake decorating supplies from a single vendor you would need to send them a 1099 (unless you pay by credit card). Individuals are exempt from this rule.

http://www.entrepreneur.com/article/207404

In any case, you would still report business income and expenses on your 1040 Schedule C. QuickBooks can handle issuing 1099s as well as integrating directly with tax software to automatically populate your Schedule C.

jason_kraft Posted 11 Nov 2011 , 7:02pm
post #4 of 15
Quote:
Originally Posted by Mb20fan

Perhaps if a company purchases a cake or whatever from you, they intend to somehow write it off as an office offense. ???



Office parties are usually tax deductible, regardless of whether or not a 1099 is issued.

This applies to cake decorating businesses as well...if you discuss business with a potential customer during a meal, 50% of the cost of the meal can typically be deducted.

costumeczar Posted 11 Nov 2011 , 9:13pm
post #5 of 15

I was under the impression that the 1099 reporting requirement had been repealed, but the dates are strange on the two articles. http://www.startuplawblog.com/2011/04/14/obama-signs-bill-repealing-new-1099-requirements/

jason_kraft Posted 11 Nov 2011 , 9:25pm
post #6 of 15

Nice...I'm glad it was repealed since that would have been a real pain. The repeal article is from April 2011 and the original article I posted was from 2010.

The answer to the original question is a little unclear if you are not a corporation (i.e. a sole prop or partnership, not an S-corp or C-corp). According to the IRS it would appear that clients would still need to issue a 1099-MISC if they order over $600 from you, but I'm not sure how often this is actually done. Your accountant should be able to provide a better answer.

Source:
http://www.irs.gov/businesses/article/0,,id=243429,00.html

costumeczar Posted 12 Nov 2011 , 12:40am
post #7 of 15

Oh good, I didn't see the year. I was thinking that maybe it had been repealed then reinstated. You never know what those weiners in Congress are up to these days.

MimiFix Posted 12 Nov 2011 , 1:55am
post #8 of 15

I've had transactions greater than $600 (orders from my customers and my purchases of supplies). Only once was I required to file a 1099, and that was for editorial services. My accountant said that goods and supplies don't need the 1099 since all transactions were recorded in my ledgers.

MCurry Posted 12 Nov 2011 , 2:19am
post #9 of 15

Here is my two cents from my past life in corporate America, if a company is ordering a cake it will be paid with a credit card or cash and you will need to provide a receipt or invoice. That person submits an expense report to get reimbursed and no 1099 would be issued. If it is a larger event with a vendor and depending on the spending limit they are authorized, a credit card may be used but more than likely a check issued to the vendor after they receive the invoice.

Many companies do establish vendors in their database and issue 1099 just to make sure the company didn't miss anyone due to fines for them. If you are going to do business with a company, the accounts payable/receivable department will let you know if you their process for doing business with them. This is assuming it is more than a department celebration which more than likely won't trigger a 1099.

Therefore, you should make sure you have appropriate insurance, tax id, etc. set up before you take on a company for business. It protects you as well as the company for potential lawsuits if someone claims food poisoning.

Regardless of if they issue you a 1099 or not, if you are operating as a legitimate business, you should be tracking sales and reporting them during your tax time.

Regarding money and business, make sure you have a good tax accountant. They would really be the expert on walking you through the liabilities and answering these types of questions.

Costumeczar - You may be able to provide info on being set up with a 1099 from businesses since you operate a business too(read your article on Hating Cupcakes! ). Not sure if you or Jason_Kraft have provided business to corporations in the past. I also find it can take up to 60 days to get paid!

Happy Baking! icon_smile.gif

costumeczar Posted 12 Nov 2011 , 3:00am
post #10 of 15
Quote:
Originally Posted by MCurry




Costumeczar - You may be able to provide info on being set up with a 1099 from businesses since you operate a business too(read your article on Hating Cupcakes! ). Not sure if you or Jason_Kraft have provided business to corporations in the past. I also find it can take up to 60 days to get paid!

Happy Baking! icon_smile.gif




Whenever I do business with a large corporation they do ask me to fill out a 1099, you're right. It's part of their tax record so they usually get one to keep on file. Once you go over a certain dollar amount (I guess it's the $600) they send you a tax form at the end of the year. If you stay below that you don't get anything in writing from them, but you just have to keep your own records for your taxes.

Generally every business that's buying things like cakes is writing them off somewhere on their taxes, so they'll probably ask you to fill out the form for their own records.

And you're right about the 60 days. They usually ask me when they place the order about my payment policy, and some will pay at the time of delivery, but most corporate businesses are run with a purchase order system. They place the request for a check to their accounting departments, and those are paid within a certain time, which is usually after the cake has been delivered. If you want to do business with larger companies you'll have to be flexible with your payment policies! I used to send the bill to the company after the delivery, or bring it with me to drop off with the cake. I'd get paid anywhere from two to four weeks afterward.

But then again, some companies will pay you when you deliver the cake, so you never know.

cupadeecakes Posted 12 Nov 2011 , 3:12am
post #11 of 15

It's been a couple of years since I did corporate gigs, but some companies will want to operate that way and send you a 1099. They will ask you to submit a W-9 form beforehand. Come tax time, if you have $5000 in 1099 sales, you will just deduct that amount from your other sales so you don't count it twice. It can be scary at first, but it's not a big deal.

sleepy20520 Posted 12 Nov 2011 , 4:24pm
post #12 of 15

ok, so i have to say thanks for all the answers....altho im still a little confused now. some are saying i will get a 1099 some are saying i wont. im not sure what to do now! icon_smile.gif i fully intend to report the income i just wasnt sure if i was required to get a 1099 and/or fill out a w9. i havent started my business yet, (am in the process) but i have a sell to a company for a xmas party (thru a friend) that id love to book, but it would just be me as an individual...
so like Jason_Kraft said, "individuals" are exempt...does this mean since i wont be a company yet i dnot have to worry about a 1099?

costumeczar Posted 12 Nov 2011 , 4:26pm
post #13 of 15
Quote:
Originally Posted by sleepy20520

ok, so i have to say thanks for all the answers....altho im still a little confused now. some are saying i will get a 1099 some are saying i wont. im not sure what to do now! icon_smile.gif i fully intend to report the income i just wasnt sure if i was required to get a 1099 and/or fill out a w9. i havent started my business yet, (am in the process) but i have a sell to a company for a xmas party (thru a friend) that id love to book, but it would just be me as an individual...
so like Jason_Kraft said, "individuals" are exempt...does this mean since i wont be a company yet i dnot have to worry about a 1099?




Check with the company itself. Some of them require you to fill out the tax forms, some don't. They might not be able to work with you if you're not licensed and inspected by the time they need the products from you. You'll have to check with them directly to see how they handle it.

sleepy20520 Posted 13 Nov 2011 , 8:58pm
post #14 of 15
Quote:
Originally Posted by costumeczar

Quote:
Originally Posted by sleepy20520

ok, so i have to say thanks for all the answers....altho im still a little confused now. some are saying i will get a 1099 some are saying i wont. im not sure what to do now! icon_smile.gif i fully intend to report the income i just wasnt sure if i was required to get a 1099 and/or fill out a w9. i havent started my business yet, (am in the process) but i have a sell to a company for a xmas party (thru a friend) that id love to book, but it would just be me as an individual...
so like Jason_Kraft said, "individuals" are exempt...does this mean since i wont be a company yet i dnot have to worry about a 1099?



Check with the company itself. Some of them require you to fill out the tax forms, some don't. They might not be able to work with you if you're not licensed and inspected by the time they need the products from you. You'll have to check with them directly to see how they handle it.




thasnk Costume! that def makes sense icon_smile.gif

ALENCON9 Posted 15 Nov 2011 , 7:13am
post #15 of 15

Our caterer provided our wedding cake for us. We had an afternoon cocktail reception with heavy hors d'oeuvres, and a carrot wedding cake to feed about 100 people. We paid $240 for the whole thing, and it was yummy! I think you should really start up with the business but yes with a regionable rates.

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