You Paid Contractors and Never Issued 1099s

A business that pays an individual or an unincorporated business for services generally has to report those payments on Form 1099-NEC once they pass a yearly dollar threshold. Rent paid to a landlord and some other payments go on Form 1099-MISC.

• Payments made by credit card or through a payment processor are not yours to report. The processor reports those
• Payments to corporations are generally exempt, with exceptions that include attorneys’ fees
• Payments for goods, as opposed to services, are not reported this way
• The dollar threshold was raised recently, so older years are tested against the lower figure that applied to them

So the list of people who needed a form is usually shorter than the list of people you paid. Building that list correctly is a bookkeeping job: every vendor, how they were paid, and how much in each year.

1. Rebuild the vendor payment history for each year from the books and bank statements
2. Remove payments made by card or processor, payments to corporations, and payments for goods
3. Test what is left against the threshold for that year
4. Request a Form W-9 from each contractor on the list
5. Prepare and file the late forms, and send each contractor their copy
6. Document the attempts made for anyone who cannot be reached

Going forward, the fix is simple and costs nothing: collect a W-9 before the first payment, every time. Our payroll services include year-end forms for payroll clients.