There is often confusion around 1099 reporting requirements for business owners. If your business made payments to an individual or a business for services performed by people who are not treated as employees need to file Form 1099. This would be a contractor to your business, who hold their own business license and permits. A contractor does not have a specific schedule set with your company, is responsible for the job hired for without training from the business, and they provide their own tools and materials for the job. Contractors are paid on a per project basis or by invoicing, and they must pay their own taxes.
We would like to share responses to questions we receive from our clients when 1099 filing time comes around each year.
What type of vendor payments are reported on a 1099?
• Payments made by check or cash to vendors qualify. Credit card payments to vendors are not reported by the business on these forms.
Which vendors should receive 1099s?
Payments of $600 or more paid during the calendar year to:
• Vendors who do NOT file as a corporation providing services such as subcontractors, legal and accounting firms and casual labor for any worker who is not an employee.
• Payments made to an attorney even if the law firm files as a corporation.
• Rents
How do I know if the vendor files as a corporation?
The most helpful tool for properly filing 1099s is Federal Form W-9. As soon as you contract services you should request a completed Form W-9 from each vendor for your records.
Form W-9 provides vital information when preparing 1099s:
• Legal name and address.
• Federal ID number/ Social security number.
• How the vendors file their business tax returns.
Which 1099 form should I use to report these vendor payments?
• Use Form 1099-NEC (Nonemployee Compensation) to report payments for all services with the exception of attorney fees.
• Attorney fees and Rents should be reported on Form 1099-MISC.
When is Form 1099-MISC due date?
• Furnish Copy B to recipients by January 31, 2022.
• File Copy A with the IRS by February 28, 2022 if you file by paper.
• File Copy A with the IRS by March 31, 2022 if filed electronically.
When is Form 1099-NEC due date?
• Furnish Copy B to recipients by January 31, 2022.
• File Copy A with the IRS by January 31, 2022.
I need help filing 1099 forms for my business.
Give P&G Built Solutions a call. We prepare all types of 1099 Forms required and would be happy to help keep your business compliant.
For additional information:
We’ve addressed the most common types of vendor payments reported by small business owners. For additional types of 1099 payments visit the IRS.gov website: