What are 1099s and who needs to file?
As business owners, it’s important to understand this topic.
1099s are IRS issued forms used to report non-employment income to individuals or entities that provide your business a service. Non-employment means these individuals are not on your payroll as W-2 employees. The 1099s report the amount your business paid a service – NOT products – provider during the tax year.
As business owners it’s your responsibility to file 1099s for any individual or business that provided your business a service, totaling $600 or more. 1099s are not issued to corporations, with the exception of medical service providers and attorneys. Corporations are: S-Corps, C-Corps, and LLCs that elect to file as corporations. Some businesses may file as LLCs and not be incorporated; they will verify when you request the signed form W-9.
EXAMPLES
Some examples of service providers are:
1. Gardeners for home office
2. Janitorial service providers for home office
3. Assistant
4. Marketing services
5. Designers – home office, logos, website
6. Freelancers
7. Photographers
8. Medical: Temporary service coverage – paying a professional to cover a shift
a. Independent contractors that perform services for your medical practice
9. Legal: Attorney fees for business set up
NOTE 1: We do not issue 1099s to any vendors you paid through third-party networks like credit card, VENMO, PayPal, Cash App, etc.
NOTE 2: We do issue 1099s to vendors you paid through ZELLE or check
What we need from you: Be on the lookout for emails from your bookkeeping specialist requesting signed W-9s from service providers we identified in your books. Provide your service providers a blank W-9 form for them to fill out and sign, and send us the completed forms. This document will give us the information we need to be able to issue the 1099s (payee’s name, tax ID, tax type, signature). W-9s are due to your bookkeeping specialist by January 15th, to give us time to complete and file the 1099s by January 31st. If you do not receive an email from our team, that means we already have the W-9s on file, or we did not find any eligible vendors in your books.
What we will do for you:
We will review your data for you and file the 1099s. Then, we will send you the 1099 forms for you to distribute by January 31st. After January 15th, you may use the following resource to file the 1099s yourself: https://www.irs.gov/
FAQS and Tips:
1. If you pay your service providers through credit card, Venmo, or Cash App, you do not need to file 1099s.
a. What about Zelle?
i. Yes, if you pay for a service through Zelle and they meet the threshold, you will need to issue a 1099.
2. What happens if you don’t file the necessary 1099s?
a. You will be subject to a fine, tax, interest, and penalties in case of an audit. The expense gets removed from your deducts and will increase your tax due, plus penalties and interest.
3. What if a vendor does not want to sign the form W-9 and receive a 1099?
a. Document the attempt (email, message), and send it to us to save to your file
b. Moving forward, choose vendors that are comfortable getting issued 1099s, or pay through credit card, Venmo, or
Cash App
4. Will the changes from the Big Beautiful Bill impact 1099 filing requirements?
a. Not until the 2026 filing year
Additional resources:
https://www.irs.gov/