1099s: What They Are, Who Needs Them, and How to Get Them Done Fast

Year-end brings both holiday cheer and a few loose ends to tie up — like 1099s. If you’ve paid any independent contractors more than $600 this year, it’s time to get those forms ready (or hand it off to us and consider it done). They’re due January 31, but starting in December keeps you ahead of the curve and out of the last-minute scramble.

What is a 1099?

This is the IRS form used to report payments to individuals or businesses that aren’t on your payroll — think freelancers, consultants, and contractors. Specifically, it’s Form 1099-NEC (Nonemployee Compensation), and it tells both the IRS and the individual how much you paid them during the year.

Do you need to issue 1099s?

If your business paid $600 or more to a contractor for services this year, you need to issue them a 1099. This requirement applies to most business types — LLCs, corporations, sole proprietors.

You do not need to issue a 1099 if made payments via credit card or a processing platform like PayPal (those are reported by the payment processor).

What Info Do You Need to File?

To issue a 1099, you’ll need a Form W-9 from each contractor.

Pro tip: don’t wait until tax season to chase people down. You see, if the IRS doesn’t receive the 1099, they have no record of your contractor’s income. Thus, some folks might be tempted to “forget” to give you their W-9.

A simple fix: require the W-9 before you release their first check.

How to Send a 1099

• Let your payroll platform handle it — Most folks use this option. If you already have a payroll platforms like Gusto, they will file automatically for you.

• E-file through the IRS or a third-party provider (we recommend 1099online.com)

• Mail the official paper forms (slow and cumbersome — not recommended)

The Deadline to file 1099-NEC is January 31st. You must send a copy to both the IRS and the individual.

What Happens If You Don’t File

The IRS doesn’t love surprises. Missing or incorrect 1099s can rack up penalties from $60 to $310 per form, depending on how late they are — and a lot more if they decide you ignored the rules on purpose. You have enough to worry about without adding this to the list.

Want to Skip the hassle?

If this whole thing makes your eyes glaze over, we’ve got you. At Hyperspace, we handle 1099 prep and filing for our clients — fast, accurate, and on time.

So go enjoy your holidays - we'll take care of the paperwork.