The due date for 1099s is right around the corner. 1099s stress people out because the IRS has a heavy penalty if they are not filed right, which is a bummer because they can be a hassle.
The good news is: you don’t have to file a 1099 for every vendor for your business!
Before you file 1099s, make sure you actually have to file one first. There are some easy but little-known ways to make sure you actually have to file a 1099 for a particular vendor. Don’t waste your time filing 1099s if you don’t have to!
Here are the rules for when you don’t have to file a 1099.
Don’t file a 1099 if…
You’ve paid a vendor less than $600 total
The threshold for filing a 1099 is $600, meaning if you’ve paid a vendor under $600, you don’t have to file one for them. Yay!
A vendor provided you with products (not services)
1099s are meant to account for vendors who have provided businesses with a service, not a product. This means lawyers, cleaning services, plumbers, etc. – not vendors who sell you materials for your business.
The vendor is a corporation
If your vendor is a C-Corp or an S-Corp, you don’t have to file a 1099 for them. But, if your vendor is an attorney, you always file a 1099 for them.
When it comes to LLC’s, you might not have to file a 1099. LLC’s have components of both a corporation and a partnership. Usually LLC’s are treated as a partnership, which means they need to have 1099s filed for them. However, LLC’s that are treated as a C-Corp or an S-Corp are not required to file 1099s. You can find this information on their W-9 form, in the top section on line 3. If they select “P” as their tax classification then they are required to have a 1099 issued, so it’s best to get a W-9 form from a vendor that is listed as an LLC.
You paid them with a credit card
If you paid your vendor with a credit card, the credit card company will actually be the ones who file a 1099-K on your behalf (so you don’t have to!). The vendors you do have to file a 1099 for are the ones you paid with a check or an e-check.
Once you know the vendors you do have to file a 1099 for, ask them for their W-9 forms to get the information you need to fill out the 1099 form. Then, make sure you submit your forms by the end of January – easy!