Independent Contractor Reporting to EDD - Form DE542
During 2014 I woke up to the fact that I was obligated to be filing a form to the California Employment Development Department (EDD) that I knew nothing about. Big oops! I try to be as 'by-the-book' as possible when running this company so to hear that I was not in compliance on something this major was quite shocking. Very quickly I submitted my DE 542s going back to 2011 with a cover letter stating why the forms were late and that I had just found out about them. It's not fun to file these things, but it's even less fun to be outside of compliance. So I suggest anyone filing 1099s to look into the California EDD laws and see if you too need to be filing form DE542.
Here is what I learned:
Any business or government entity that is required to file a federal Form 1099-MISC for services received from an independent contractor is required to report specific independent contractor information to the Employment Development Department (EDD). This information will be used to locate parents who are delinquent in their child support obligations. The independent contractor reporting requirements apply if you hire an independent contractor and the following statements all apply:
You are required to file a Form 1099-MISC for the services performed by the independent contractor.
You pay the independent contractor $600 or more OR enter into a contract for $600 or more.
The independent contractor is an individual or sole proprietorship.
If all the above statements apply, you must report the independent contractor to EDD within 20 days of paying/contracting for $600 or more in services. You are not required to report independent contractors that are corporations, general partnerships, limited liability partnerships, and limited liability companies.
You can comply with the above by filing form DE 542 available at http://www.edd.ca.gov/pdf_pub_ctr/de542.pdf
More information about filing requirement is available at:
Tuesday, January 13, 2015