1099 Filing Made Simple: Who Gets One and Who Doesn’t

Every January, small business owners find themselves searching through emails, spreadsheets, and old invoices trying to figure out who needs a 1099. The process feels complicated until you understand a few simple rules—and once you do, issuing 1099s becomes one of the easiest year-end tasks in your business.

This beginner-friendly guide breaks down what you need to know: who gets a 1099, who doesn’t, how to interpret a W-9, which payment methods change your filing obligations, and how to file everything quickly and accurately.

Who Needs a 1099 (and Who Doesn’t)

Businesses must issue a 1099-NEC when they pay $600 or more during the year to a non-employee for services performed in the course of business.

You must issue a 1099-NEC to:

• Independent contractors and freelancers
• Virtual assistants
• Graphic designers or marketing consultants
• Maintenance, IT, repair, and professional service providers
• Bookkeepers or accountants, unless incorporated
• Commission recipients
• Any service provider who is not your employee

A 1099-MISC applies to:

• Rent payments
• Royalties over $10
• Payments to attorneys, where special rules apply
• Prizes or awards
• Certain medical payments

Who Does Not Receive a 1099

You generally do not issue a 1099 if:

• The vendor is taxed as a C corporation or S corporation. Exceptions apply to certain attorney and medical payments.
• You paid using a credit card.
• You paid through a third-party processor, such as PayPal Goods & Services, Stripe, Square, Venmo Business, Cash App Business, Etsy, or Shopify Payments.
• The recipient is your employee. Employees receive a W-2.

Why the W-9 Matters—and How to Read It Correctly

You cannot determine whether a vendor needs a 1099 without a completed Form W-9. The W-9 provides:

• Legal name and business name
• Address
• Taxpayer Identification Number, such as an SSN or EIN
• Federal tax classification, which tells you whether a 1099 is required

How to Interpret the W-9

Once you receive a W-9, the tax classification boxes help determine whether a 1099 should be issued.

Here’s a quick guide:

Important Notes

• LLC does not automatically mean no 1099. The tax classification of the LLC determines whether reporting is required.
• If the W-9 isn’t signed, it is not valid.
• Always collect a W-9 before issuing payments.

If you are having trouble obtaining a W-9 from a contractor, read How to Handle a Missing W-9 From a Contractor—Even After You’ve Already Paid Them.

Payment Methods and Whether You Must Issue a 1099

Understanding how you paid a vendor is just as important as knowing who you paid.

You Must Issue a 1099 When You Pay By:

• Check
• ACH or bank transfer
• Wire transfer
• Zelle, which is a bank-to-bank transfer rather than a payment processor
• Cash
• Money order
• Venmo Personal
• PayPal Friends & Family

You Usually Do Not Issue a 1099 When You Pay Through:

• Credit card
• Debit card
• PayPal Goods & Services
• Venmo Business
• Stripe
• Square
• Etsy Payments
• Shopify Payments
• Cash App Business

These systems are generally responsible for reporting qualifying payments through Form 1099-K.

When and How to File Your 1099s

Deadlines

• January 31 — Send 1099-NEC forms to recipients and file with the IRS.
• January 31 — Send 1099-MISC forms to recipients.
• February 28 — 1099-MISC paper filing deadline with the IRS.
• March 31 — 1099-MISC electronic filing deadline.

How to File

Option 1 — IRS IRIS Portal

The IRS provides a free online e-file system for small businesses. You can file electronically without mailing paper forms and receive confirmation of the filing.

Option 2 — Filing Software

Third-party filing services include:

• Tax1099.com
• Avalara 1099

These services allow you to enter vendor information and electronically file information returns.

What You Need

• Completed W-9s
• Total payments to each vendor
• Vendor addresses
• Vendor tax classification

Common 1099 Errors That Can Lead to IRS Notices

• Assuming all LLCs are exempt
• Forgetting to issue 1099s to partnerships
• Sending 1099s to corporations unnecessarily
• Using incorrect or incomplete Tax ID numbers
• Duplicate reporting of credit-card or payment-processor transactions
• Starting the process in late January
• Failing to document attempts to obtain a W-9

Fortitude’s Recommendation

Most small business owners can file their own 1099s quickly and inexpensively once they understand the rules. If you need help setting up your contractor onboarding process, reviewing vendor classifications, or confirming who receives a 1099, we’re here to support you.

1099 Filing FAQs

Do all contractors get a 1099?

No. Generally, the reporting requirement depends on how much the contractor was paid, what the payment was for, the vendor’s tax classification, and how the payment was made.

What if I never collected a W-9?

Request it as soon as possible. If the contractor refuses to provide the required taxpayer information, backup withholding rules may apply.

Do payment apps like PayPal or Venmo change my filing requirement?

They can. Certain payment methods shift the reporting responsibility to the payment processor rather than the business making the payment.

Do landlords receive 1099s?

Rent payments may be reportable on Form 1099-MISC depending on the circumstances and the recipient’s tax classification.

Can Fortitude file my 1099s?

Yes. Many small business owners can also file their own 1099s once they understand the process, and we’re happy to help clients determine the appropriate level of support.

Should I send a 1099 to a C or S corporation?

Generally not, although important exceptions apply to certain payments, including some payments for legal and medical services.

Does paying someone through Zelle eliminate the need for a 1099?

No. Zelle is generally treated as a bank-to-bank payment method rather than a payment processor that assumes Form 1099-K reporting responsibility.

Need Help?

Fortitude Tax & Accounting, located in Stansbury Park, Utah, just outside the Greater Salt Lake City area, provides tax and accounting services for therapists, real estate professionals, and small business owners. Led by Melissa Calwell, CPA, EA, with more than 30 years of experience in private industry and public accounting, Fortitude provides tax planning and preparation, bookkeeping, payroll, and practical year-round guidance.

We help business owners understand their numbers, make informed decisions, and approach taxes and accounting with greater clarity and confidence.

Fortitude Tax & Accounting has provided this article for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor regarding their individual situation.

Melissa Calwell CEO

Melissa Calwell, CPA, EA is the founder and CEO of Fortitude Tax & Accounting.  She has been working with businesses on accounting and taxes for over three decades.

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Fortitude Tax and Accounting