The Ultimate 1099 Checklist for Small Businesses
Navigating the World of 1099s: How to Prep, File, and Stay Compliant
If you’ve ever felt unsure about what to send, when to file, or how to stay on the IRS’s good side, you’re not alone! The good news is that 1099s are simpler than they seem once you know the basics and break them down step by step.
This quick checklist walks you through exactly what you need to gather, when to send, and how to stay compliant without second-guessing yourself!
So… What Exactly is a 1099 and Who Needs One?
A 1099-NEC is what’s used to report payments made to non-employees to the IRS. If you’ve paid someone $600 or more for services like video editing or photography and they’re not on payroll, you may need to issue this form.
Here’s who should receive a 1099:
Independent contractors
Freelancers
Sole proprietors
Single-member LLCs
→ Excluded: Corporations (S-Corps and C-Corps)
→ Excluded: Employees (they get W-2s)
Your 1099 Checklist
Here’s what you’ll need to gather before hitting “send” on your 1099s:
✅ Step 1: Collect W-9 Forms Early
When it’s time to issue your 1099s, you’ll require specific information from each contractor. Collecting a W-9 will ensure you have everything you need already on file:
Full legal name or business name (As it appears on their tax return)
Tax Identification Number (either a Social Security Number or an EIN)
Tax classification (LLC, sole prop, etc.)
Mailing address
→ Pro move: Make collecting a W-9 part of your onboarding process when you hire a new contractor. That way, you’re not scrambling come January.
✅ Step 2: Track Payments All Year
Keep tabs on what you pay your contractors. Most bookkeeping software (QuickBooks, Xero, Gusto) can do this automatically if you categorize correctly.
→ Important: Payments via PayPal, Venmo, or Stripe? You don’t issue the 1099, the processor does (with a 1099-K). You only report checks, ACH, Zelle, or cash.
✅ Step 3: Double-Check Contractor Info
Outdated details = rejected filings
Even if you’re e-filing, you’ll need their current mailing address for your records and for the IRS. People move. Businesses rebrand. If their address has changed, make sure you get an updated W-9!
✅ Step 4: File Your 1099s by the Deadline
January 31st is the cutoff date every year to send the form to both the contractor and the IRS. Missing this deadline can lead to unnecessary complications. Don’t wait!
✅ Step 5: Future-Proof Your 1099 Process
Keep next year stress-free by:
Collecting W-9s from your contractors before making any payments
Reviewing your contractor list and verifying payments
Identifying who needs a 1099 (and who doesn’t)
Letting a financial partner (like Factor) handle tax filing and compliance
How We Can Help
If managing this process sounds overwhelming, don’t worry! At Factor, we specialize in helping entrepreneurs get this stuff done right so you can stay in your zone of genius.