The Complete Guide to Creating and Filing 1099s: A Step-by-Step Walkthrough

Written By Brendan Abbott

Filing 1099 forms is one of those annual tasks that can range from straightforward to surprisingly complex, depending on your business structure and volume of contractors. Whether you're running a small business, managing a nonprofit, or building your own accounting practice, understanding the 1099 process inside and out is essential for staying compliant and avoiding penalties.

This guide walks you through everything you need to know about creating 1099-MISC and 1099-NEC forms—the two most common types for businesses—with practical workflows using QuickBooks Online and Track1099 (now Avalara 1099 & W-9).

Understanding 1099 Forms: The Basics

What Are 1099 Forms?

1099 forms report various types of income paid to individuals and entities who aren't your W-2 employees. The IRS uses these forms to track income that doesn't have taxes withheld at the source. Think of them as the reporting mechanism for the 1099 economy—contractors, freelancers, vendors, and service providers.

The Two Main Forms: 1099-NEC vs 1099-MISC

1099-NEC (Nonemployee Compensation)

  • Purpose: Reports payments to independent contractors and freelancers for services

  • Threshold: $600 or more per year

  • Common uses: Consulting fees, freelance work, contract labor

  • Due date: January 31 (both recipient copies and IRS filing)

  • When to use: You hired someone to perform services, they're not your employee, and you paid them $600+

1099-MISC (Miscellaneous Information)

  • Purpose: Reports various types of miscellaneous payments

  • Threshold: Varies by box, typically $600+

  • Common uses: Rent payments, royalties, prizes and awards, medical and healthcare payments, attorney fees (Box 10), crop insurance proceeds

  • Due date: February 28 (paper filing) or March 31 (e-filing) for most boxes

  • When to use: You made payments that don't fit the 1099-NEC criteria but still need reporting

Key distinction: In 2020, the IRS reintroduced the 1099-NEC specifically to separate nonemployee compensation from other miscellaneous payments. Before 2020, nonemployee compensation was reported on 1099-MISC Box 7. This change has significant implications for filing deadlines—1099-NEC is due much earlier (January 31) than most 1099-MISC boxes.

Other 1099 Forms (Brief Overview)

While this guide focuses on 1099-NEC and 1099-MISC, you should be aware of other common 1099 variants:

  • 1099-INT: Interest income from banks and financial institutions ($10+ threshold)

  • 1099-DIV: Dividend income and capital gain distributions ($10+ threshold)

  • 1099-K: Payment card and third-party network transactions (threshold varies by state, federal threshold is $5,000 for 2024)

  • 1099-R: Distributions from pensions, annuities, retirement plans, IRAs

  • 1099-B: Proceeds from broker and barter exchange transactions

  • 1099-S: Proceeds from real estate transactions

Most small businesses and nonprofits primarily deal with 1099-NEC and occasionally 1099-MISC. If you're dealing with the others, the same general principles apply, but consult with a tax professional for specific reporting requirements.

Do You Need to Issue a 1099?

Before diving into the how-to, let's address the crucial question: Do you actually need to file?

The General Rule

You must file a 1099 if ALL of these conditions are met:

  1. You paid $600 or more during the tax year (for services or certain payments)

  2. The payment was for business purposes (not personal)

  3. The recipient is not a corporation (with exceptions—see below)

  4. You made the payment in the course of your trade or business

Common Exceptions (When You DON'T Need to File)

Corporations: Generally, you don't need to issue 1099s to corporations (C-corps or S-corps). The major exception is attorney fees—you must issue a 1099-MISC (Box 10) to attorney corporations.

LLCs: This gets tricky. The treatment depends on how the LLC is taxed:

  • Single-member LLC (disregarded entity): Issue 1099 (treated as sole proprietor)

  • Multi-member LLC (partnership): Issue 1099 (unless it elected S-corp status)

  • LLC taxed as S-corp or C-corp: Generally no 1099 required (except attorneys)

Always ask for a W-9 from your vendors—this tells you their tax classification and whether you need to issue a 1099.

Payments through credit cards or PayPal: If you paid a vendor exclusively through credit card, debit card, or third-party payment networks like PayPal, Venmo, or Stripe, you generally don't need to issue a 1099-NEC or 1099-MISC. These payments are reported on Form 1099-K by the payment processor. However, if you paid the same vendor through multiple methods (e.g., some checks and some PayPal), you still need to issue a 1099 for the non-payment-card amounts if they exceed $600.

Personal payments: If you hired someone to do work on your personal residence, you don't issue a 1099. This is business-only reporting.

Special Considerations for Nonprofits

Nonprofits follow the same rules as for-profit businesses when it comes to 1099 reporting. Common scenarios for nonprofits include:

  • Contract speakers and presenters: If you paid a speaker $600+ for an event, you need to issue a 1099-NEC

  • Consultants and advisors: Board members who are compensated, grant writers, fundraising consultants

  • Event vendors: DJ services, catering services (if not incorporated), photography services

  • Professional services: Accountants, lawyers (1099-MISC Box 10 even if incorporated), marketing consultants

The Foundation: Collecting W-9 Forms

Before you can file any 1099, you need accurate information from your vendors. This is where the W-9 form comes in.

What Is a W-9?

Form W-9 (Request for Taxpayer Identification Number and Certification) is the document you request from vendors and contractors before paying them. It provides:

  • Legal name and business name (if different)

  • Tax classification (individual, sole proprietor, LLC, corporation, etc.)

  • Taxpayer Identification Number (TIN) - either Social Security Number (SSN) or Employer Identification Number (EIN)

  • Address

  • Certification that the information is correct

When to Request W-9s

Best practice: Request W-9s BEFORE making any payments. Make it part of your vendor onboarding process. Many businesses include language in their contracts requiring vendors to provide a W-9 before receiving payment.

Minimum requirement: You should have a W-9 on file before you need to issue a 1099. Since you won't know if a vendor will exceed $600 until year-end, it's safest to collect W-9s from all new contractors upfront.

How to Request W-9s

Manual method:

  1. Download the current year's W-9 form from IRS.gov

  2. Email it to the vendor with clear instructions

  3. Store completed forms securely (they contain sensitive information)

  4. Verify the information matches your payment records

Automated method (using Track1099/Avalara):

  1. Log into your Track1099 account

  2. Go to "Vendors" or "Payees"

  3. Click "Request W-9"

  4. Enter the vendor's email address

  5. The system emails them a link to complete the W-9 electronically

  6. Once submitted, it's automatically stored in your account with TIN matching completed

W-9 Storage and Security

W-9 forms contain Social Security Numbers and EINs—highly sensitive information. Storage requirements:

  • Keep indefinitely: There's no expiration on W-9s unless the vendor's information changes

  • Secure storage: Use encrypted cloud storage, locked file cabinets, or secure document management systems

  • Limited access: Only employees who need the information should have access

  • IRS requirement: You must have a W-9 on file to backup your 1099 filing

TIN Matching

One of the most common reasons for IRS notices is a mismatch between the name and TIN on your 1099 and what the IRS has on file. This is called a "TIN mismatch" and can result in backup withholding requirements.

Prevention: Both QuickBooks and Track1099 offer TIN matching services that verify the name/TIN combination against IRS records before you file. This catches errors early and prevents CP2100/CP2100A notices from the IRS.

Preparing Your Data: Tracking Payments Throughout the Year

The key to stress-free 1099 season is maintaining clean books all year long.

Setting Up Vendor Records in QuickBooks

Step 1: Create vendor profiles correctly

When adding a new vendor in QuickBooks Online:

  1. Go to Expenses → Vendors → New Vendor

  2. Enter the company/individual name exactly as it appears on their W-9

  3. In the "Tax info" section, select the appropriate track payments for 1099 checkbox

  4. Enter their TIN (SSN or EIN) from the W-9

  5. Save the vendor

Step 2: Set up 1099 tracking

  1. Go to Settings (gear icon) → Account and Settings → Expenses

  2. Enable "Track payments for 1099s"

  3. Select your 1099 accounts (typically accounts like "Contract Labor," "Professional Fees," "Rent Expense")

  4. Map these accounts to the appropriate 1099 boxes

Step 3: Categorize payments correctly

As you enter bills and expenses throughout the year:

  • Use the correct vendor name (matching the W-9)

  • Categorize to 1099-tracked accounts

  • Don't mix 1099 and non-1099 vendors in batch payments

  • Keep credit card payments separate from check/ACH payments

Common Categorization Errors

Mixing payment methods: If you pay a vendor sometimes by check and sometimes by credit card, QuickBooks may include all payments in the 1099 total. You'll need to manually adjust for credit card payments since those don't require 1099 reporting.

Wrong vendor name: Paying "John Smith Consulting" when the vendor's W-9 says "John P. Smith" will cause a TIN mismatch. Use the exact legal name from the W-9.

Reimbursements: If you reimburse a contractor for expenses they paid (e.g., travel costs), and they bill you separately for these, don't include reimbursements in the 1099 total. Only actual compensation for services goes on the 1099-NEC.

Year-End Reconciliation

In December (or early January at the latest), run a 1099 summary report:

  1. In QuickBooks: Reports → Expenses and vendors → 1099 Contractor Balance Detail

  2. Review each vendor who will receive a 1099

  3. Verify the amounts match your expectations

  4. Check for any credit card payments that need to be excluded

  5. Confirm you have current W-9s for everyone on the list

Method 1: Filing 1099s Through QuickBooks Online

QuickBooks Online offers integrated 1099 preparation and e-filing through their Intuit 1099 service. This is convenient if you're already using QuickBooks for bookkeeping.

Prerequisites

  • QuickBooks Online subscription (any tier)

  • Correct vendor setup with TIN information entered

  • Payment tracking enabled and properly categorized

  • W-9 forms on file (for your records)

Step-by-Step Process

Step 1: Access the 1099 Filing Center

  1. Go to Taxes → 1099 Filings (or search "1099" in the QuickBooks search bar)

  2. Click "Prepare 1099s"

  3. QuickBooks will walk you through a wizard

Step 2: Review Your Information

  1. Company information: Verify your business name, EIN, and address are correct

  2. Contact information: Confirm the contact person for 1099 questions

  3. Review and click "Continue"

Step 3: Select Contractors

  1. QuickBooks displays all vendors tracked for 1099s

  2. Check the box next to each vendor who should receive a 1099

  3. The system shows total payments for each vendor

  4. Click "Continue"

Step 4: Verify Contractor Information

For each selected contractor:

  1. Confirm the legal name matches their W-9

  2. Verify the TIN/EIN

  3. Update address if needed

  4. Select the correct 1099 type (usually 1099-NEC)

  5. Click "Continue"

Step 5: Review Payment Amounts

  1. QuickBooks shows total payments by vendor

  2. You can edit amounts if needed (for example, to exclude credit card payments)

  3. Verify the box assignment (Box 1 for NEC, various boxes for MISC)

  4. Look for any zero-dollar 1099s and remove them

  5. Click "Continue"

Step 6: Preview and Submit

  1. Review the summary of all 1099s to be filed

  2. QuickBooks shows the filing fee (typically $4-6 per form)

  3. Choose delivery method:

    • E-file and mail: QuickBooks e-files to IRS and mails paper copies to recipients

    • E-file and email: E-files to IRS and emails PDFs to recipients

    • E-file only: You print and mail recipient copies yourself

  4. Click "Submit for filing"

Step 7: Recipient Delivery

If you selected "e-file only" or need to print copies:

  1. After submission, QuickBooks generates PDF copies

  2. Download and print copies for your recipients

  3. Mail by the January 31 deadline (for 1099-NEC)

QuickBooks 1099 Pricing (2026)

  • E-file fee: Approximately $4.99-$6.99 per form (varies by QuickBooks plan)

  • Includes IRS e-filing

  • Mailing service: Additional $2-3 per recipient if you choose mail delivery

  • State filing: Additional fees may apply for states requiring separate filing

Pros and Cons of QuickBooks 1099 Filing

Pros:

  • Integrated with your existing bookkeeping system

  • Automatic data population from expense tracking

  • Simple wizard-based interface

  • Handles both IRS filing and recipient delivery

  • Decent for low-volume filers (under 50 forms)

Cons:

  • More expensive per-form than specialized 1099 services

  • Limited bulk editing capabilities

  • No TIN matching before filing (can result in IRS notices)

  • Doesn't handle state filing for all states

  • Less flexible for complex scenarios (multiple EINs, high volume)

Method 2: Filing 1099s with Track1099 (Avalara 1099 & W-9)

Track1099, now owned by Avalara, is a dedicated 1099 and W-9 management platform. It's particularly well-suited for accounting firms, businesses with high contractor volume, and anyone who wants more control over the 1099 process.

Why Use Track1099?

  • Cost-effective: Volume-based pricing starting at $3.10 per form, dropping to $0.63 for 500+ forms

  • TIN matching: Verify name/TIN combinations before filing to prevent IRS notices

  • State filing: Handles combined federal/state filing for participating states

  • QuickBooks integration: Import vendor data directly from QuickBooks Online

  • W-9 collection: Automated W-9 request and tracking system

  • Multi-payer support: Manage 1099s for multiple EINs/clients in one account

  • API access: Automate workflows for high-volume filers

Account Setup

Step 1: Create your account

  1. Go to track1099.com (now redirects to Avalara 1099 & W-9)

  2. Click "Sign up" or "Create free account"

  3. Enter your business information

  4. Verify your email address

  5. Log in to your new account

Step 2: Add payer information

  1. Click "Payers" in the main menu

  2. Click "Add Payer"

  3. Enter your business details:

    • Legal business name

    • EIN

    • Business address

    • Contact person

  4. Save the payer information

Step 3 (Optional): Connect QuickBooks

  1. Go to Settings → Integrations

  2. Click "Connect to QuickBooks Online"

  3. Authorize the connection

  4. Select which payer account to link

  5. Map your 1099 expense accounts

Collecting W-9s in Track1099

Step 1: Add vendors/contractors

  1. Click "Vendors" or "Payees"

  2. Click "Add Vendor" or import from CSV/QuickBooks

  3. Enter basic information (name, email, address)

  4. Save the vendor record

Step 2: Request W-9

  1. From the vendor list, select the vendors who need W-9s

  2. Click "Request W-9"

  3. Customize the email message if desired

  4. Click "Send"

  5. The vendor receives an email with a secure link to complete their W-9 electronically

Step 3: Track W-9 status

  • The system shows "Pending," "Completed," or "Expired" for each W-9 request

  • Automated reminders are sent to vendors who haven't completed their W-9

  • Completed W-9s are automatically stored and linked to the vendor record

Step 4: TIN matching

  1. Once a W-9 is completed, you can initiate TIN matching

  2. Select vendors → Click "Match TIN"

  3. Track1099 verifies the name/TIN combination with the IRS database

  4. Results show "Pass," "Fail," or "Unable to verify"

  5. Fix any mismatches before filing 1099s

Filing 1099s in Track1099

Step 1: Import or enter payment data

Option A: Manual entry

  1. Go to "1099 Forms" → "Create Forms"

  2. Select the form type (1099-NEC or 1099-MISC)

  3. Select the tax year

  4. For each vendor:

    • Select vendor from dropdown (auto-populates W-9 info)

    • Enter payment amount in the appropriate box

    • Save the form

Option B: CSV import

  1. Download the Track1099 CSV template

  2. Fill in vendor information and payment amounts

  3. Go to "1099 Forms" → "Import"

  4. Upload your CSV file

  5. Map the columns to Track1099 fields

  6. Review and confirm the import

Option C: QuickBooks import

  1. Go to "1099 Forms" → "Import from QuickBooks"

  2. Select the date range (usually full calendar year)

  3. Track1099 pulls vendor payment data from QuickBooks

  4. Review and adjust amounts as needed

  5. Confirm the import

Step 2: Review and edit forms

  1. Click "1099 Forms" to see all created forms

  2. Review each form for accuracy:

    • Verify vendor information matches W-9

    • Check payment amounts are correct

    • Ensure proper box assignment (Box 1 for NEC, etc.)

  3. Edit any forms that need adjustments

  4. Delete any forms under $600 threshold

Step 3: Address verification (optional but recommended)

  1. Select all forms → Click "Verify Addresses"

  2. Track1099 checks addresses against USPS database

  3. Corrects any invalid addresses

  4. Prevents undeliverable mail

  5. Small additional fee per address verified

Step 4: Preview 1099s

  1. Click "Preview" to see what recipients will receive

  2. Review for any obvious errors

  3. Make final edits if needed

Step 5: E-file with IRS

  1. Click "File" or "Submit to IRS"

  2. Select filing method:

    • E-file to IRS: Electronic filing (recommended)

    • Paper filing: Generate PDFs to mail yourself (not recommended)

  3. Review the filing summary and cost breakdown

  4. Enter payment information

  5. Click "Submit"

Step 6: Recipient delivery

  1. Track1099 automatically delivers recipient copies when you e-file

  2. Choose delivery method:

    • Email (included): Sends secure PDF to recipient's email on file

    • Postal mail (additional fee): Prints and mails paper copies

    • Both: Email + mail for extra assurance

  3. Recipients without email automatically get postal delivery

Step 7: State filing (if required)

  1. Track1099 handles Combined Federal/State Filing (CF/SF) for participating states

  2. For non-CF/SF states, you may need to file separately

  3. The system flags any state-specific requirements

  4. Additional fees apply for state filing (typically $1.49 per state return)

Track1099 Pricing Breakdown (2026)

Per-form pricing (volume-based):

  • Forms 1-15: $3.10 each

  • Forms 16-165: $2.30 each

  • Forms 166-500: $1.30 each

  • Forms 501+: $0.63 each

Additional services:

  • TIN matching: Usually included in e-file fee or minimal extra charge

  • Address verification: ~$0.07 per address

  • Postal delivery to recipients: Varies by volume, typically $1-2 per recipient

  • State filing: $1.49 per state return for participating states

  • Corrections: Included (if you e-filed the original through Track1099)

Example cost scenarios:

  • 5 forms with email delivery: ~$15.50 (5 × $3.10)

  • 50 forms with email delivery: ~$73.50 (15 × $3.10 + 35 × $2.30)

  • 200 forms with postal delivery: ~$625 (15 × $3.10 + 150 × $2.30 + 35 × $1.30 + 200 × $1.50 for mail)

Making Corrections

Even with careful preparation, mistakes happen. Track1099 makes corrections straightforward.

Step 1: Identify the error

  • Did you already e-file the form?

  • Is the error on the recipient copy or the IRS copy (or both)?

  • What type of error: wrong amount, wrong TIN, wrong box, etc.?

Step 2: File a corrected return

  1. Go to "1099 Forms"

  2. Find the form that needs correction

  3. Click "Correct" or "File Correction"

  4. Update the information

  5. Check the "CORRECTED" box (Track1099 does this automatically)

  6. Submit the correction

Important: You can only e-file corrections for forms you originally e-filed through Track1099. If you filed through QuickBooks or another service, you'll need to use that service to file the correction.

Correction deadlines: While there's no firm deadline for corrections, file them as soon as you discover the error. This prevents CP2100 notices and potential penalties.

Track1099 Pros and Cons

Pros:

  • Much lower per-form cost than QuickBooks, especially at volume

  • TIN matching prevents IRS notices

  • Automated W-9 collection saves time

  • Excellent for accounting firms managing multiple clients

  • QuickBooks integration pulls data automatically

  • State filing capabilities

  • API for custom integrations and automation

  • Corrections included if you filed the original through Track1099

Cons:

  • Separate platform from your accounting software (unless you use the integration)

  • Initial setup takes longer than QuickBooks built-in

  • Postal delivery to recipients costs extra

  • Learning curve for first-time users

  • Overkill if you only have 2-3 forms per year

Critical Deadlines for 2026 Tax Year (Filing in January-February 2027)

1099-NEC:

  • Recipient copies: January 31, 2027

  • IRS filing: January 31, 2027 (e-file or paper—same deadline)

1099-MISC:

  • Recipient copies: January 31, 2027 (for most boxes)

  • IRS filing (paper): February 28, 2027

  • IRS filing (e-file): March 31, 2027

Important note: E-filing gives you an extra month for 1099-MISC, but NOT for 1099-NEC. The 1099-NEC deadline is always January 31 regardless of filing method.

State deadlines: Some states have different deadlines. Track1099 and QuickBooks flag state-specific requirements, but always verify your state's rules.

Common 1099 Mistakes and How to Avoid Them

Mistake 1: Issuing 1099s to corporations

Error: Sending a 1099-NEC to a vendor who's incorporated as an LLC taxed as an S-corp or C-corp.

Prevention: Always get a W-9. Check Box 3 on the W-9 to see the tax classification. If it says "C Corporation" or "S Corporation," you generally don't need to issue a 1099 (except for attorney fees).

Mistake 2: Missing the January 31 deadline for 1099-NEC

Error: Assuming you have until March 31 because you're e-filing.

Prevention: Mark January 31 on your calendar as the hard deadline for 1099-NEC. Set internal deadlines earlier (mid-January) to give yourself buffer time.

Mistake 3: Including credit card payments

Error: Reporting total payments including credit card and PayPal transactions.

Prevention: Exclude any amounts paid via credit card, debit card, or third-party payment networks. These are reported on Form 1099-K by the payment processor. Track these separately in your accounting system or adjust the amounts before filing.

Mistake 4: Name/TIN mismatches

Error: The name on the 1099 doesn't exactly match what the IRS has on file for that TIN.

Prevention:

  • Use the exact legal name from the W-9

  • Use TIN matching services (Track1099 offers this)

  • For individuals, use their full legal name, not a business/DBA name

  • If they provided a DBA, verify which name matches their TIN

Mistake 5: Not filing because you "forgot" or "ran out of time"

Error: Skipping 1099 filing entirely due to missed deadlines or administrative oversight.

Prevention: Penalties are steep—$60 to $310+ per form depending on how late you file. Even if you're past the deadline, file as soon as possible to minimize penalties. Set up recurring calendar reminders in October and December to start preparing.

Mistake 6: Paying contractors in December and forgetting to include it

Error: December payments sometimes get lost in year-end chaos, especially if you're on accrual basis accounting.

Prevention: Run your 1099 reports in early January (after you've closed December) to capture all payments for the calendar year. Remember, 1099s are based on the calendar year, not your fiscal year.

Mistake 7: Not keeping W-9s on file

Error: Issuing a 1099 without having a W-9 to backup the information.

Prevention: The IRS can require you to prove you had a reasonable basis for the TIN you reported. A signed W-9 is your proof. Never issue a 1099 without one. If a contractor refuses to provide a W-9, you may be required to do backup withholding (withhold 24% of payments and remit to IRS).

IRS Penalties: What You're Risking

Understanding the penalties helps emphasize why getting 1099s right matters.

Failure to file penalties (per form):

  • Filed within 30 days of deadline: $60

  • Filed after 30 days but before August 1: $130

  • Filed after August 1 or not filed: $310

  • Intentional disregard: At least $630 per form (no maximum)

For small businesses (gross receipts under $5 million):

  • Maximum penalty per year: Varies based on timing, but can reach $1,000,000+

TIN mismatch penalties:

  • If you receive a CP2100 or CP2100A notice (TIN mismatch notice) and don't correct it, you must begin backup withholding

  • Failure to backup withhold: Penalties equal to the amount you should have withheld

Real-world impact: A business with 50 contractors that doesn't file 1099s at all could face $15,500 in penalties ($310 × 50). That's a significant hit that's entirely avoidable with proper planning.

State Filing Requirements

Many states require separate 1099 filing or participate in the Combined Federal/State Filing (CF/SF) program.

States requiring 1099 reporting (as of 2026 - verify current requirements):

  • Alabama

  • Arizona

  • Arkansas

  • California (FTB)

  • Colorado

  • Connecticut

  • Delaware

  • Georgia

  • Hawaii

  • Idaho

  • Indiana

  • Kansas

  • Maine

  • Maryland

  • Massachusetts

  • Michigan

  • Minnesota

  • Mississippi

  • Missouri

  • Montana

  • Nebraska

  • New Jersey

  • New Mexico

  • North Carolina

  • North Dakota

  • Ohio

  • Oklahoma

  • South Carolina

  • Vermont

  • Virginia

  • West Virginia

  • Wisconsin

CF/SF states: Many of these states participate in CF/SF, which means your e-file provider (Track1099, QuickBooks, etc.) can file both federal and state returns simultaneously.

State-specific nuances:

  • Some states have different thresholds ($1,500 vs. $600)

  • Some require reporting to different state agencies

  • Filing deadlines may differ from federal deadlines

  • Some states require magnetic media filing above certain thresholds

Best practice: Use a platform that handles state filing automatically (like Track1099) or consult with your accountant to ensure compliance.

Special Scenarios and Edge Cases

Scenario 1: Mid-year business structure change

Question: A contractor who was a sole proprietor for the first 6 months of the year incorporated as an LLC taxed as an S-corp in July. What do I report?

Answer: Report the payments made while they were a sole proprietor (January-June). Get a new W-9 reflecting their current status. Only report amounts paid while they were in a reportable status.

Scenario 2: Paying a vendor through multiple methods

Question: I paid a contractor $1,200 total—$500 via check and $700 via credit card. What do I report?

Answer: Report only the $500 paid via check. The credit card payments are reported by the card processor on Form 1099-K (though the $700 may fall below the 1099-K threshold, that's the processor's responsibility, not yours).

Scenario 3: Rent paid to a property management company

Question: We pay rent to a property management company. Do I issue them a 1099-MISC?

Answer: If the property management company is a corporation, no. If they're a sole proprietor, partnership, or LLC not taxed as a corporation, yes—report on 1099-MISC Box 1 (Rents). Get a W-9 to confirm their status.

Scenario 4: Attorney payments

Question: Our attorney is a professional corporation. Do I issue a 1099?

Answer: Yes. Attorney fees are an exception to the corporation rule. Issue a 1099-MISC reporting the fees in Box 10 (Gross proceeds paid to an attorney), regardless of business structure.

Scenario 5: Paying foreign contractors

Question: I hired a contractor in Canada to do design work. They're not a U.S. person. Do I issue a 1099?

Answer: No. 1099s are only for U.S. persons. For foreign contractors, you should request Form W-8BEN (for individuals) or W-8BEN-E (for entities). You may have other reporting obligations (like Form 1042-S for certain payments), but not a 1099.

Workflow Recommendations by Business Type

Small Business (1-20 contractors annually)

Recommended approach: QuickBooks built-in 1099 filing

Workflow:

  1. October: Review vendor list, request W-9s for any missing

  2. December: Run 1099 summary report, reconcile

  3. Early January: File through QuickBooks (aim for mid-January to beat rush)

  4. Choose email delivery to recipients (saves cost and time)

Why: Simple, integrated, worth the slightly higher per-form cost for convenience.

Growing Business (20-100 contractors annually)

Recommended approach: Track1099 with QuickBooks integration

Workflow:

  1. Year-round: Request W-9s for all new contractors before payment

  2. Quarterly: Review vendor list in Track1099, do TIN matching

  3. December: Pull payment data from QuickBooks into Track1099

  4. Early January: Review, adjust, and e-file

  5. Use email delivery for most, postal mail for those without email

Why: Better per-form pricing, TIN matching prevents headaches, scales as you grow.

Accounting Firm or High-Volume Filer (100+ contractors or multiple clients)

Recommended approach: Track1099 with API integration or bulk import

Workflow:

  1. Year-round: Automated W-9 collection for all new vendors

  2. Monthly: TIN matching for new vendors

  3. December: Automated import from accounting systems for all clients

  4. Early January: Bulk review, edit exceptions, batch e-file

  5. White-labeled recipient delivery (if serving clients)

Why: Automation saves massive time, lowest per-form cost, robust features for managing multiple EINs/clients.

Nonprofit Organization

Recommended approach: Track1099 (especially if you have events with multiple presenters/vendors)

Workflow:

  1. Event planning phase: Require W-9s from all contracted speakers, performers, vendors

  2. Post-event: Enter payment information in Track1099

  3. Year-end: Compile all contractor payments across events

  4. Early January: Review, adjust for any duplicate vendors across events, e-file

  5. Email delivery to most recipients

Why: Event-based workflow benefits from centralized W-9 collection; Track1099's organization helps track across multiple events/programs.

Final Checklist: Before You File

Use this checklist in January to ensure you're ready:

  • W-9 on file for every 1099 recipient

  • Verified legal name matches W-9 for all vendors

  • TIN matching completed (if using Track1099)

  • Excluded all credit card/third-party network payments

  • Excluded all payments to corporations (except attorneys)

  • Verified amounts are calendar year totals

  • Removed any forms under $600 threshold

  • Checked that Box assignments are correct (Box 1 for NEC, etc.)

  • Previewed at least a sample of forms for obvious errors

  • Confirmed recipient delivery method (email, mail, or both)

  • Verified state filing requirements if applicable

  • Set up payment method for filing fees

  • Planned for recipient delivery by January 31

  • Saved copies for your records (required to keep for at least 3 years)

Conclusion: Building a Sustainable 1099 Process

The difference between 1099 filing being a stressful annual crisis versus a smooth, manageable process comes down to systems and habits:

Year-round habits:

  • Collect W-9s before making first payment to new contractors

  • Properly categorize contractor payments in your accounting system

  • Keep a running list of who'll need 1099s

Annual process:

  • Start early (mid-December)

  • Use tools appropriate to your volume

  • Verify everything before filing

  • File early to avoid the January 31 rush

Whether you choose QuickBooks for its convenience or Track1099 for its cost-effectiveness and features, the key is having a systematic approach. The businesses that struggle with 1099s are the ones that treat it as an afterthought in late January. The ones that breeze through it started preparing in October.

And remember: the penalties for not filing, filing late, or filing incorrectly are significant. The investment in getting it right—whether that's software costs, accounting help, or your own time—is always worth it compared to dealing with IRS notices and penalties.

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Need help with your 1099 filing or year-end accounting? Blackpoint Accounting specializes in helping small businesses and nonprofits stay organized and compliant. We handle the full process—from W-9 collection to filing and recipient delivery—so you can focus on running your organization. Contact us at accounting@blackpointcpa.com or (407) 533-0037.

Brendan Abbott