It's 1099 time.

What's $50 multiplied by the number of names on your vendor list?  If it's a bigger number than you care to lose, then it's time to get serious about getting your 1099s out.  $50 is the standard IRS penalty for failing to issue a required 1099.

Businesses - whether incorporated or not -- need to send a 1099-MISC to vendors and contractors to whom you paid $600 or more during 2008.  The only exceptions are for payments corporate vendors, and LLCs are not normally "corporations" for this purpose.  That means you should send anybody else - repairmen, lawyers, consultants, even accountants - a 1099 by the end of this month.  You have until the end of February to get the information to the IRS.

More than one business has found itself embarrassed at 1099 time because they didn't bother to get tax-reporting information from their vendors before paying them.  Some vendors don't like to provide this information, as if (perish the thought) they intended not to report their income to the IRS.  You don't have much leverage to get the information once you've made the payment.

Information reporting can apply to more than just payments to contractors.  You have to report payments of interest to non-corporate lenders, for example.  You can click here for a comprehensive list of 1099 reporting requirements.

Also, keep in mind that the IRS often requires electronic filing of 1099s, and they will impose the $50 fine if paper 1099s are filed when electronic reporting is called for.

It's wise to insist that every new vendor supply you with a completed Form W-9 before you hire them.  It makes no sense to risk IRS penalties to help someone else skip out on taxes.