1099 filing for small business

If you’re asking about 1099 filing for a small business, here’s the basic idea:

What is a 1099?

A 1099 form reports payments your business made to non-employees such as independent contractors, freelancers, or certain vendors.

When you need to file

You generally must file a 1099-NEC if, during the year, you paid:

• $600 or more to an individual or unincorporated business
• for services (not products)
• and the person was not your employee

Common examples:

• Freelancers
• Consultants
• Bookkeepers
• Graphic designers
• Contractors

Who usually does not need a 1099

You usually do not issue a 1099 for:

• Employees — use W-2 instead
• Payments to most corporations
  • though there are exceptions
• Payments for goods/products only
• Payments made by credit card, PayPal, Venmo business, or similar payment processors
  • those are usually reported by the processor, not on your 1099-NEC

What form to use

• 1099-NEC: for contractor/service payments
• 1099-MISC: for rent, prizes, legal settlements, some other types of payments

Filing deadlines

For 1099-NEC:

• Send to contractor: by January 31
• File with IRS: by January 31

What you need before filing

Get a completed W-9 from each contractor before paying them:

• legal name
• business name
• address
• Taxpayer Identification Number (TIN or SSN/EIN)

How to file

You can file:

• through payroll/accounting software
• through an online filing service
• by paper, if filing a small number and allowed

Penalties

Late or incorrect filing can lead to IRS penalties, so it’s important to keep good records.

If you want, I can also give you:

1. a simple step-by-step 1099 filing checklist, or
2. help you figure out who in your business needs a 1099.