Did you pay a contractor $600 this Year? Here’s What you need before Year-End

If you paid any individual contractor or unincorporated business $600 or more this year for services, you likely need to send them a Form 1099-NEC by January 31. The information you need to do that (a completed W-9 with their legal name, address, and taxpayer ID) is much easier to collect now than it is to chase down after the year closes and the contractor has moved on to other clients.

Every year, the same problem shows up in January: a business owner needs to file 1099s, but doesn't have a current address, a signed W-9, or even confirmation of whether a contractor is a sole proprietor or an LLC taxed as an S-corp (which would exempt them from the requirement). Fixing this in September, while contractors are still actively working with you, takes minutes. Fixing it in January can take weeks, and missing the deadline comes with real penalties.

Who Actually Needs a 1099-NEC?

You need to issue a 1099-NEC to any individual, partnership, or LLC (not taxed as a corporation) that you paid $600 or more during the year for services, if the payment was made by cash, check, or ACH. Payments made by credit card or a third-party platform like PayPal are handled differently and generally don't require a 1099-NEC from you, since the payment processor reports those instead.

What You Need to Collect for Each Contractor

• A completed Form W-9 — this is the single most important document, since it confirms their legal name, business type, address, and Taxpayer Identification Number
• Confirmation of entity type — sole proprietors and most LLCs need a 1099; corporations (including LLCs taxed as S-corps or C-corps) generally don't
• A running total of payments made — pulled from your bookkeeping software, categorized by vendor
• Current mailing address — contractors move, and an outdated address on file means a returned form and a scramble in January

Why September Is the Right Time to Do This

Contractors you're still actively working with in September are easy to reach. A quick email asking them to complete or update a W-9 gets answered same-day when the relationship is active. The same request in late January, after a project has wrapped and the contractor has moved on, often goes unanswered, leaving you to file a 1099 with incomplete information or push it back further.

Penalty for missing the deadline: Late 1099 filings carry penalties that increase the longer you wait, ranging from smaller penalties for forms filed shortly after the deadline to steeper ones for forms filed more than 30 days late or not at all. Intentional disregard of the filing requirement carries no cap on the penalty. Getting your W-9s collected now avoids the most common cause of a late filing: not having the contractor's information on hand.

What If a Contractor Won't Provide a W-9?

If a contractor refuses to provide a completed W-9, you're required to begin backup withholding at a flat rate on future payments to them until you receive it. This is rare, but it's worth requesting the W-9 in writing (email counts) so you have a record of the request if the issue comes up later.

Not sure which contractors need a 1099?

Latitude Tax Advisors can review your vendor payments, flag who needs a 1099, and help you collect the missing W-9s before year-end, not after.

Get Your 1099 Prep Started

Frequently Asked Questions

Do I need to send a 1099 to an LLC?

It depends on how the LLC is taxed. A single-member LLC or partnership generally needs a 1099-NEC if paid $600 or more. An LLC that has elected S-corp or C-corp taxation generally does not, but you should confirm this on the W-9 rather than assume, since the box the contractor checks determines the requirement.

What's the deadline to send 1099s to contractors?

Form 1099-NEC must be provided to the contractor and filed with the IRS by January 31 for payments made in the prior calendar year. This deadline applies whether you file on paper or electronically.

Do I need a 1099 for payments made by credit card or PayPal?

No. Payments made by credit card, debit card, or third-party payment platforms are reported by the payment processor on Form 1099-K instead. You only need to issue a 1099-NEC for payments made by cash, check, or direct bank transfer.

What happens if I file a 1099 late?

The IRS charges a per-form penalty that increases the later the form is filed, with higher penalties for forms filed more than 30 days late, filed after August 1, or not filed at all. Collecting contractor information now is the most effective way to avoid a late filing caused by missing paperwork.