1099 Procedure

1099s are forms that need to be issued in January to your vendors and subcontractors. Please watch the video or read below for more info.

Who Should Be Issued 1099s?

Your company is required by law to issue 1099s to any subcontractor who performed a service for your company within the calendar year they were paid more than $600, and the individual or a company that you paid is not registered as an S corp.

Subcontractors

Subcontractors can vary wildly. Fo example, maybe you hired a person to help you with your website, and you paid that person more than $600 in a year. Or if you hired someone to come in and help you with some carpentry, so they were acting as a true subcontractor. This is another example of someone who would need a 1099. Again, these, these would be issued to companies or individuals who are not an S corp who were paid more than $600 within a calendar year for a service they performed within your business.

Rent and Lawyers

In addition to this, we are also required to issue 1099s to an entity that you are paying for rent. So if that entity or individual is not an S corp, we will issue a 1099 to that entity or individual. We are required to issue 1099s to lawyers regardless of how much you’ve paid them

1099s Only For Checking Account Payments, Not Third Party or Credit Cards

One other piece of clarification is that 1099s are required to be issued for payments that have run through your checking account. For example, if you’ve written a check to a subcontractor or you’ve paid cash to a subcontractor.

We will not be issuing 1099s for subcontractors that you paid via credit card or any other third party payment platform. So like PayPal, for example, if you’ve paid someone through PayPal, we will not be issuing a 1099.

We cannot issue 1099s to your subcontractors that you’ve paid through a third party app because the third party is required to give some reporting to the IRS and if we were to issue a 1099 to those vendors, then the income would end up being double reported.

So it’s very important that we not issue 1099s for these kinds of third party apps. So again, if you have any questions about this, feel free to reach out, but just know this is how we will be handling it. As we approach end of year, please again, assist us with any W9s that we may need to collect on your behalf.