1099s Explained: Who do I send them to and when?

Owners must send 1099s to everyone who was paid more than $600 for a business service using check, cash, ACH, or other cash equivalent like Zelle...with some exceptions:

• If the business paid these individuals via credit card, Venmo for Business, or PayPal for Business, you do not need to send a 1099

Note: not all payment processors are the same.  If you are in doubt, ask that vendor if they send 1099s on your behalf.  If they do not, you must do so.

• If the vendor provides a signed W-9 stating they file taxes as a corporation.  Incorporated vendors are exempt from 1099s

Note: if a vendor publicly uses "Inc" in their business name, only then can you safely skip requesting their W-9

• If the vendor is an attorney.  They are never exempt and must be sent 1099s if paid over $600

What is a business service?

A few examples of business services are:

• Rent (both office & equipment)
• Coaching
• Consulting
• Accounting
• Cleaning
• Computer repairs
• Building repairs
• Vehicle repairs
• Attorney and legal fees
• Advertising and marketing services
• Snow removal
• Painting
• Construction
• Professional services

What is a 1099?

IRS 1099 Forms are documents that report payments made between different entities.  
Note: there are different types of 1099 forms (1099-NEC is sent to service vendors, 1099-MISC is sent for rents paid, 1099-INT is sent for interest paid, 1099-K is what credit companies send)

 

What is a W-9?
Form W-9 is a document that provides an individual the information needed to file a form with the IRS, such as a 1099.

See also How can I e-file 1099s on my own?
See also Singletrack's W-9 Compliance and 1099 Filing service
See also Is my worker a Contractor or an Employee?
See also Using Gusto to pay 1099 Contractors