The end of another calendar year is almost upon us. For those of you with a business, reporting payments made to individuals during 2016 of $600 or more is required by January 31. Rather than scramble at the last minute to determine whom you should send a Form 1099, let’s go over some criteria and a process to help alleviate any stress.

If you have a business or rental property, comb through your checkbook register and credit card statements to find and list out whom you have paid a total of $600 or more during the year. Any incorporated business can generally be scratched off your list, unless it is for legal or medical services. While corporations, including not-for-profits, are not required to receive most 1099s, they are required to submit 1099s.

In compiling your list, you should skip over payments made for merchandise, telephone, freight or storage. Also, personal payments made by all folks with or without a business are not reportable. An example would be payments made for the remodeling of your home.

Once you have your list compiled, you will need to obtain taxpayer identification numbers for each one of those businesses. The proper way to do that is to send them a Form W-9, Request for Taxpayer Identification Number. Do this right away! If the W-9 is not sent back to you in time, you will have to follow up and remind them on the phone in January.

Most of the information reporting you do will be on Form 1099-MISC. You will use this form to report nonemployee compensation payments made to independent contractors, rents paid for business premises and attorney fees paid during the year. If you are paying on a business loan to someone, you will report the interest portion of your payments of $10 or more on Form 1099-INT.

The purpose for filing 1099s is for the IRS to match the information you report to what the recipient reported on their income tax return. In the event of a mismatch, the recipient will receive an IRS notice. If you made an error in what you filed, you must file a corrected information return. The IRS penalties can be stiff if you don’t file 1099s properly or on time. On your income tax return you will need to answer a couple of questions on whether you were required to file 1099s and if you actually did so properly. If you have questions, consult with your tax advisor. Your advisor can file 1099s for you electronically with the IRS, which is less prone to errors than paper filed copies.

Get started early with your 1099 process. New for this year—Form 1099-MISC with amounts in Box 7, Nonemployee Compensation, are now required to be submitted to the IRS by January 31, rather than a month later. It is part of the IRS’s attempt to stem income tax refund fraud