The subject of US Form 1099s and Notaries comes up often in the various notary groups on Facebook, so I hope the following will be of some assistance.
The notary associations and others will tell you to contact the company for a corrected 1099 if it is wrong or to request one if it is missing, but I would rather just use my own records of my income and expenses and file any necessary tax returns based on my own records.
That’s what you’re responsible for — keep accurate records & report what your records show when you file your taxes. You aren’t responsible for whether they send you a 1099 or whether it’s accurate.
It’s your income. Of course, you should report it. The 1099s are more for their records to document their business expenses than they are for your records to document your income.
How a US Form 1099 May Be Wrong as a Statement of Your Income
Even if you receive a US Form 1099, it may not be an accurate record of your income.
For the vast majority of all notaries and other small businesses, your income is based on what you RECEIVED and when you received it. Your outgo is based on what you PAID and when you paid it. This is a cash accounting system.
Businesses that are incorporated and large enough to have a bookkeeper often use the accrual accounting, where their income is based on when the order from their customer or client is received, their outgo is based on when they place an order with a vendor, and other accounting matters can get complicated.
Smaller businesses may use the cash accounting system, the same one you use.
What this means is they may post an amount due to you in their records when you take the assignment, even though you won’t receive the funds for weeks.
Or, they may cut you a check in December, so it goes on that year’s books for them, but you don’t receive it until January.
Or their fiscal year may not be the same as the calendar year, so they may record the “expense” (what they owe you) in one calendar year and not pay you until the next one.
The 1099s are their report of their expenses, not your report of your income. You need your own records to know what you made and what you spent during the 12 calendar months. For your own business, it matters when you received money. For their 1099, it matters when they booked it.
So, no, you don’t rely on their 1099s. You have to report the income shown on them, but they aren’t your income for the year. If they don’t agree with your records, you can see whether any of the above apply. Or just report your income and expenses based on your records, which is what you’re supposed to do, in any case.
This article is posted for information only. The preceding is not intended as legal advice or legal opinion. I am not an attorney and you should consult an attorney, a CPA, or another qualified tax professional if you need answers to specific questions.