How to File 1099’s for Your Business

As soon as a new calendar year, the vast majority of services businesses have a new task that is due by the end of January, and that is the 1099.

There’s often confusion around what this task is and how to get it done, so this article aims to deliver that information to you so you can be confident that you are filing your 1099 paperwork correctly.

What is a 1099 Form?

What this form is is you telling the IRS (Internal Revenue Service - the people who collect taxes in the USA) “I paid this person this much, but they were not an employee.”

If you look on the IRS website, you will see that there are multiple types of 1099 form.

The one that we are concerned with in this situation is the 1099-NEC. The NEC stands for “Non-Employee Compensation”

These are the payments you made to US based freelancers, subcontractors, or anyone you would consider self-employed.

The difference between an employee and subcontractor varies a lot state to state, so that will not be covered at this time and if you have that question contact your CPA.

Who is responsible for filing a 1099 form?

If you run a business, and you paid us based freelancers / subcontractors / self-employed individuals, you as the Payee have to file these.

What Vendors do I need to file a 1099 form for?

‍Few quick filters here. 

• The Vendor must have received at least $600 from you
• The Vendor must be based in the USA
• The Vendor is self employed, with a legal standing of sole proprietorship, LLC, or a Partnership.

What information do I need to file a 1099 form for a subcontractor?

‍You need the vendors:

• Full Name
• Mailing Address
• Tax Identification Number (one of the below options)

How do you get the Name, Address and TIN? Best practice is for all new subcontractors, have them fill out a W-9 form (link to W-9 form Download)‍

Didn’t do that? Call them and get it.

Can’t get this information for some reason? Then you should not include their payment as an expense. That is the by the book answer. This means your taxable income will go up. Call your CPA for best advice here.

When do I have to file 1099’s by?

‍January 31st each year for the previous year.

For example:

2022 1099’s are due Jan 31, 2023
2023 1099’s are due Jan 31, 2024
2024 1099’s are due in Jan 31, 2025

And on and on forever. Uncle Sam’s gotta get that bread.

How to File 1099 forms in 2022?

‍These days there are a million ways to pay your subcontractors, which is great because it speeds up business, but is a pain because it creates more to keep track of.

Below we run through how to actually go through and get your 1099’s filed depending on how you make payments to those you need to send 1099’s to.‍

All of these instructions assume you already have all of the required information listed above in the “What information do I need to file a 1099 form for a subcontractor” section.‍

If you do not have that done, start there then come back to this part.

If you have further questions after reading, feel free to set up a meeting with us (link to set up meeting) or shoot us a dm on twitter @dialedinbookkeeping.

How to File 1099’s if I use Gusto to pay my subcontractors?

Lucky for you, you have a nice fancy payroll system, and so you do not have to do anything. They do it for you for all payments made through Gusto.

If you paid contractors mostly through Gusto, but a few times sent a check or a venmo, add those few times you paid outside of Gusto in to Gusto.

To do that, go to “Pay Contracts” go to the change the date to the date it was paid, and switch Payment Method to Historical Payment.

This won’t debit and cash from your account.

This will get all your 1099 info into Gusto, then by Jan 31 they will submit for you.

The deadline to submit historical payments is early/mid January, so you should do it in December.

I recommend adding in outside payments to gusto this way if you have under 50 of these payments. If you have more than that there is likely a faster way so keep reading.

How to File 1099’s if I use ADP to pay my subcontractors?

Like Gusto, ADP will file 1099 forms for you automatically in early January.

Also - switch to gusto from ADP. It’s much better.

To add in extra vendor payments into ADP, upon further review as of right now I do not know if there is a way to do that outside of doing it upon setup of your whole account.

You can send 2 1099 forms, so follow one of the below guides to fill in the gaps.

How to File 1099’s if I use [Insert Payroll Service] to pay my subcontractors?

Most popular payroll services, including Gusto, ADP, Paychex, and Paylocity should be filing a 1099 form for you to the IRS and sending a copy to your contractor.

If you use one of these tools (or another software platform) and are unsure, reach out to their support team. There is likely a short approval you need to do before submission can be completed.

How to File 1099’s if I use Quickbooks Online Bill Pay to pay my subcontractors?

Quickbooks Online (QBO) bill pay is a popular service to pay your contractors if you also use the quickbooks accounting program.

Here is how to make sure you get your 1099’s filed correctly using it.

1. Make sure you have recorded every payment to every contractor in QBO and you included the Vendor name on the expense. Like so below. If not, dig in to all your contractor expenses and for all the ones with no vendor name, add them in.

2. For each vendor that you know you want to file a 1099 for, you have to have the “Track Payments for 1099” box checked within the Vendor Details additional info. To find that box, go to that vendors page, then click edit in the top right, then scroll down, and click this box

3. Once you are done with these steps it means all your data is set up and ready to process. So to start, go to “Expenses” > “Vendors” > “Prepare 1099’s” and follow the prompts form there to finish things up.

This will cost you $4 per contractor, which is well worth your time.

How to File 1099’s if I write checks to pay my subcontractors?

If you are using an accounting system, then this is quite easy.

Run a report showing how much you paid each vendor throughout the entire year.

Then, if you are using a cloud based accounting software (Quickbooks Online, Xero, Wave, etc.) they will likely have a feature to allow you to file through their system.

If you do not have any accounting or payroll software, please jump to that section → (Visit the “How to File 1099's if I do not have any accounting or payroll software” section) ‍

How to File 1099’s if I use Zelle  to pay my subcontractors?

If you are using an accounting software, you should:

1. Get all of those Zelle payments added correctly in to the accounting system
2. Use the accounting systems 1099 processing tools

If you are not using accounting or payroll software, please jump to this section (Visit the "How to File 1099's if I do not have any accounting or payroll software" section) 

How to File 1099’s if I use Venmo to pay my subcontractors?

‍If you are using an accounting software, you should:

1. Get all of those Venmo payments added correctly in to the accounting system
2. Use the accounting systems 1099 processing tools

If you are not using accounting or payroll software, please jump to this section (Visit the "How to File 1099's if I do not have any accounting or payroll software" section) 

How to File 1099’s if use Cash to pay my subcontractors?

‍If you are using an accounting software, 

1. Get all of those cash payments added in to the accounting system
2. Use the accounting systems 1099 processing tools

If you are not using accounting or payroll software, please jump to this section (Visit the "How to File 1099's if I do not have any accounting or payroll software" section) 

How to File 1099’s if I do not have any accounting or payroll software?

Step 1 - book a call with us so that we can get you up to speed. 

Only half joking here. 

You likely have no real idea how your business is performing if you do not have accounting software, and you do not have anyone doing your bookkeeping if you do not have accounting software because we bookkeepers won’t work without it.

Here’s the link to schedule a meeting with our team. (Dialed In Meeting Link)

Step 2 - Choose if you want to do this and file online, or file via paper copy.

If you want to file online, move to Option A below.

If you want to file via paper, move to Option B

Option A - Filing electronically

1. Click on the “IR Application for TCC” button on this page
2. Get your ID Verified by ID.me (link in step 1 will redirect you there)
3. Log back in to the IRS website at this link
4. Complete your application to file
5. Fill in and fill the appropriate information for a 1099-NEC form

(Side note - the registration process here is not fun.)

Option B - Filing via paper and post mail

1. Tally up the total number of 1099’s you need to file (total subcontractors)
2. Click on this link to order that amount of 1099 forms (Order Forms From IRS Link)
3. Fill them out per the instructions listed in the package and return by Jan 31

Common Question about 1099’s.

Q: Do I have to file a 1099 for my virtual assistant?

A: If they do not live in the USA, then you do not.

Q: If I used a freelancer off of upwork or fiver, do they need a 1099?

A: No they do not, Upwork / Fiverr handles all that for them.

Q: Can my accountant file 1099 forms for me?

A: Yes they are typically able to do that

Q: Can my bookkeepers file 1099 forms for me

A: Yes they are typically able to do that

Q: I don’t have a Tax ID for a subcontractor, what should I do?

A: Get it from them somehow via call, text, email, however you can.

Q: I don’t have an address for a subcontractor, what should I do?

A: Get it from them somehow via call, text, email, however you can.

Q: I have no way of getting the required information I can from a subcontractor, what should I do?

A: Fill in a 1099 form with all the information that you can and save it somewhere you can keep. Put an explanation on there that says “Did not file because of missing subcontractor information.” The Tax Code states if they were paid over $600, and they are a US Subcontractor, and you did not file their 1099 that those payments made are not deductible from your Taxable Income.

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