Hi all! :) This is my first question to this site. Hopeful for direction. I own a business that has decided to initiate a referral program. This program would allow anyone who refers us customers to receive a percentage of the proceeds. My question(s) are:
1. What information do I need to keep on file for them? i.e. social, 1099, etc. and at what point, (up front? After an earned amount? etc.)
1. Is there a dollar amount threshold in which there is no reporting?

I guess that I am in hopes that there is a magic number in which I can freely reward folks for sending me business! :D

Any help would be greatly appreciated!
Thank you!
Lorna

The IRS requires that you use a Form 1099-MISC to report payments made for non-employee compensation that is $600 or more. If you are making payments to non-employees, then you would use that form. If you are making payments for referrals to employees, then it is reported as additional wages or commissions.

It is necessary to have a full name, address and social security number for all persons receiving Form 1099-MISC. You should give each person receiving payment a Form W-9 that requests the tax information listed above. You can download a PDF copy of Form W-9 from the IRS website: Internal Revenue Service. A good policy is to not pay someone until you have that information. It is more difficult to find the information after payment is made.

:) Thanks a million!