Every January the same scramble happens, and it is entirely preventable in the preceding eleven months.
You need to send 1099s. To do that you need each contractor’s legal name, address and taxpayer identification number. You do not have them, because nobody asked at the time, and now you are emailing people who finished a job in March and have no particular reason to reply quickly.
The deadline does not move for that.
The basic rule
If you paid an unincorporated contractor $600 or more during the calendar year for services in the course of your trade or business, you generally owe them a Form 1099-NEC, and a copy goes to the IRS.
Three qualifiers that matter:
Services, not goods. Buying materials from a supplier is not the same as paying someone to perform work.
Trade or business. Paying a handyman to fix something at your home is not reportable. Paying the same person to fix something at your shop is.
The $600 is cumulative for the year. Four separate $200 jobs cross the threshold. People who think in terms of single invoices miss this constantly.
The deadline
January 31. The contractor’s copy and the IRS filing.
That is one of the tightest deadlines in the small business calendar, because it arrives immediately after the year closes, before most businesses have finished reconciling December, and while everyone is still catching up from the holidays.
Which is why the actual solution is not a better January.
Collect W-9s before you pay, every time
The single habit that eliminates this problem: no W-9, no first payment.
Form W-9 gives you the contractor’s legal name, business name if different, tax classification, address and TIN. It is a one-page form, they have almost certainly filled one out before, and the moment to ask is when they want to be paid.
That last point is the whole trick. Before the first payment, you have leverage. After the last payment, you have an email address and hope.
Make it part of onboarding a vendor, alongside getting their invoice details. Keep the W-9 on file. When January arrives, you are running a report rather than conducting an investigation.
Who does not get one
The W-9 answers this for you, which is the point of having it.
Corporations generally do not get a 1099-NEC. The classification box on the W-9 tells you. Note that certain payments, notably to attorneys, are reportable even to corporations, so do not treat “it’s a corporation” as automatic.
LLCs depend on their tax classification. An LLC taxed as a partnership or disregarded generally gets one. An LLC that elected corporate treatment generally does not. You cannot tell from the name, and this is exactly why guessing fails.
Payments by card or payment app. If you paid via payment card or through a payment app or online marketplace, that processor generally reports it on a 1099-K, and you should not also issue a 1099-NEC for the same payment. Reporting it twice makes the contractor’s return look wrong and creates a mess that lands on them.
That last one is worth being careful about, because it changes what you report depending on how you paid rather than who you paid. Paying the same contractor partly by check and partly by card splits the reporting.
Employee or contractor is a separate question
Worth naming, because it sits underneath all of this: issuing a 1099 does not make someone a contractor.
Worker classification depends on the actual working relationship, the degree of control, and other factors. Getting it wrong carries considerably more exposure than a late 1099, because it reaches back into payroll taxes.
If you are directing someone’s hours, providing their tools and supervising how they do the work, that arrangement deserves a proper look rather than a 1099 and optimism. That is a question for whoever prepares your return, ideally before the working relationship is a year old.
The bookkeeping that makes January boring
Here is what turns this from an annual crisis into a report:
- A vendor record for every contractor, with the W-9 attached, created before the first payment.
- Contractor payments in their own expense category, not scattered across generic accounts, so you can see the year’s total per vendor.
- Payment method recorded, so you can separate card and app payments that the processor is reporting from checks and transfers that you report.
- Reconciled books, because a per-vendor annual total is only trustworthy if the underlying transactions are complete.
With those four in place, January is: run the report, check totals against $600, file. Without them, January is reconstructing a year of payments from bank statements while chasing W-9s from people who have moved on.
If your books are behind, this is one of the concrete costs of that, arriving on a fixed date with a penalty attached. Catching up before year end is much cheaper than doing it in the last week of January under deadline.
What to do today
If it is not January, you are in the good position. Go through this year’s payments now, identify anyone approaching or past $600, and collect missing W-9s while the working relationship is still warm.
If it is January and you are missing information, file with what you have, document your attempts to get the rest, and put a W-9 step into your vendor onboarding so this is the last year it happens.
Not sure who crossed the threshold this year? That is a straightforward thing to pull from reconciled books. If yours are not current, send me three months of statements and I will build you a real Profit and Loss free, and we can talk about what it takes to be ready before January rather than during it.