April 2, 2025 • 16 mins
1099s don’t have to be a tax season nightmare—but only if you know who actually needs one and how to file them correctly. The last thing you want is to miss a deadline, overpay taxes, or accidentally trigger an audit.
In this episode, we’re breaking down:
✔️ Who really needs a 1099 (and who doesn’t)
✔️ The difference between a 1099-NEC and a 1099-MISC
✔️ Common mistakes that lead to IRS penalties
✔️ What payment methods do and don’t require a 1099
✔️ How to stay organized so you’re not scrambling in January
To make things even easier, I’m giving you a free 1099 decision tree—no strings attached! This tool will help you confidently determine who needs a 1099 every tax season.
🎧 Hit play now and get ahead of your 1099 filings before tax time sneaks up on you!
Resources & Links
Website: https://www.firestormfinance.com/
Instagram: https://www.instagram.com/firestormfinance/
Threads: https://www.threads.net/@firestormfinance?hl=en
LinkedIn: https://www.linkedin.com/in/samantha-e-8796b6176/
Newsletter: https://firestormfinance.myflodesk.com/podcastnewsletter
1099 Decision Tree: https://www.canva.com/design/DAGdgjX_nR0/ymLV35UTG6TJfDrHQyTZgw/view?utm_content=DAGdgjX_nR0&utm_campaign=designshare&utm_medium=link2&utm_source=uniquelinks&utlId=hf2b858c341
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker (00:00):
Welcome to CreativeMind Smart Money, the podcast where
creativity and business smarts collide.
I'm your host, Samantha Eck,bookkeeper, business coach, and
your go to guide for building thecreative business of your dreams.
Whether it's mastering your money,streamlining your systems, or growing
your business, I'm here to shareinsights that empower you to thrive.
Plus, I'll be bringing in industryexperts to dive into all aspects
(00:22):
of entrepreneurship, so you canturn your passion into profit
without losing your creative spark.
Let's get started
You are listening to the CreativeMinds Smart Money Podcast, and on
today's episode, we're coveringa much needed topic, 1099's.
This is an episode you're gonna wanna keepin the back of your pocket for when next
year rolls around, because January is.
(00:45):
Always counts when it comesto 1099's and nobody can ever
figure out who they're owed to.
So today I am gonna give you the factsas straight as possible, as well as a
completely free resource with no stringsattached, that you can utilize next
year to file your 1099's with ease.
So first of all.
(01:05):
1099s are necessity for anybusiness owner who uses any type
of service provider, contractor.
You rent space, you pay royalties.
There's so many differentaspects to it that.
We just kind of have togo over all of them today.
So according to the IRS businessesneed to file a 1099-NEC, so it's NEC
(01:32):
for each person to whom you have paidat least $600 in services performed
by someone who's not your employee.
So if you hire me.
If you hire a social media managerthat is someone who's been paid $600.
Now there are exceptions to that andI will get to it, so, but let's kind
of just talk about who we need topay and payments to an attorney, cash
(01:56):
payments for fish, things like that.
But.
Very specifically, you do not owe1099 to people you pay product like
you spend and buy products from.
So if you buy it from someoneon faire, you buy from a local
vendor, something like that.
You do not owe them a 1099.
It is only for those who do services.
(02:17):
And this is specifically because the IRSwants to see what people are being paid.
And that sounds a little bit scary.
There is another 1099you need to be aware of.
It is called the 1099 MISC.It is required for each person
that you've paid throughout theyear, at least $10 in royalties.
(02:37):
And royalties will include thingslike if you are a bookish goods
vendor and you sell Sarah J Maasproducts, that is a royalty product.
So if you pay her.
Publishing company royalties.
Technically you wouldneed to send them a 1099.
(02:58):
It also pertains to rents any prizes,other income bartering like we had
talked about, things like that.
Those are also on a 1099 MISC.There are very common misconceptions
about who needs to file a 1099.
So I wanna be as plain and simplefor you in this moment right now.
(03:20):
like I mentioned, I will begiving you a free resource that
you can utilize year after year.
Obviously, rules are changing andI'll try and keep it up to date, but.
The first thing you need to askyourself when you're thinking of
any service provider and who youneed to pay is, did you pay them
$600 or more during the tax year?
(03:41):
So for example, me, mypackages start at $500.
So if we work together forat least two months, you're
already going to owe me a 1099.
But the next question you need toask yourself is how you pay them,
because depending on certain rules.
You might not be owing them a 1099.
It might be their payment processor.
(04:01):
It might be someone elsethat owes them a 1099.
So you have to kind of watch out for that.
So this is where the misconceptioncomes in, where everybody claims
that they just need to send a 1099to anybody they've worked with that
has services, but it's just not true.
So who needs to file a 1099?
Of course, again, it is.
Anybody that is working with a serviceprovider, that they pay them over $600.
(04:26):
So common mistakes that I seeand ways to make this whole
process easier, first of all.
You need to get a W9 from everyservice provider regardless of
their classification, their businessclassification, regardless of
how you pay them, just to makesure you have your butt covered.
Essentially, this W9 is going to beon your records for your bookkeeper
(04:49):
or whoever to know how to file them.
Now if you are like, okay, I don't wantto send it because this person always
sends me 1099, even though they don'thave to, I understand your situation.
Please explain that to the personyou're working with or to their CPA or
whatever, just to make them understand.
But if at all possible, alwayssend a W9 or always get a W9
(05:13):
before any payments are made.
This is so important because if,for example you pay someone $600,
they do require a 1099 and you don'thave their W9, you could be at risk
for paying whatever taxes they owe.
So it's so, so, so important.
I. The second thing isincorrect information.
(05:34):
So whether they have an incorrectEIN or tax identification number, or
they have an incorrect address, youneed to always check in on that and
make sure that those are correct.
A lot of places will help youe-file nowadays, so it's just
really easy to get these done.
It's just a matter of making sure youhave your information correct and then.
Of course, everyone does assume thatevery third party handles 1099's,
(05:58):
but not every third party does.
So before we get into allof the like nitty gritty of.
Who needs to pay, whether or not we wannaask ourselves when and how do we file.
So as of January 1st, everyyear your 1099's should be open.
They don't open for e-file, I believe,until like halfway through the month.
(06:19):
So if you wanna e-file them, youkind of have to wait, but you can
already get them prepped and in thesystem to e-file the day it opens.
Better early than never,I would say in this case.
As of the first, you should haveeverything that you need to file.
Get all of your information upfront.
Make sure you have everythingthat you need to file.
Go to a website, whetherthat's QuickBooks Track 1099.
(06:43):
Tax 1099, and if this is too overwhelmingfor you, feel like, I don't know
who needs a 1099, I can't handle it.
That's exactly what your bookkeeperor your CPA is there for.
A lot of people do love to file their1099's themselves, and some people
actually miss 1099's for certainpeople, but it's completely up to
(07:03):
you who, and why you wanna do that.
Once you file, they will send eithera mail out notification to whoever
you owe to, or they will send.
An e-file email and then they'll alsoe-file on be on your behalf to the IRS.
So there's really not a lot thatyou have to do, but you need to
have all the information upfront.
(07:25):
Sometimes it can be a little bit difficultto like figure out where things go,
which is why working with a bookkeeper orworking with someone else who knows kind
of what those forms look like can help.
But sometimes they can geta little bit complicated.
1099's are due by January 31st.
I believe the exceptionis miscellaneous ones.
I think miscellaneous ones aredue by the our March because I
(07:46):
think rent ones are different.
I'm not a hundred percent sure on that.
Don't quote me.
1099's themselves, I would alwaysjust file them by January 31st
entirely, because that is what I'veknown and always been told, is the
deadline, if you don't file by the31st, you can actually get penalized.
So for one thing, if youfile your taxes and you.
(08:10):
Say that you had to pay services,but you didn't send out 1099's,
they will penalize you, and youcan pay large amounts of fees.
Everybody's like, oh, no,they're not, they're not that
bad that you can pay fees.
They may audit you because they maynot understand, and if you don't have
correct information, or you don'thave SSNs or EINs or TIN numbers.
They can actually, like I said, sendyou a notice and then charge you for
(08:34):
the taxes that are owed by this person.
So you wanna make sure thatyou are all up to date there.
now that we've kind of gone over allof the nitty gritty, I really wanna
talk about who needs a 1099 and why.
And like I said, I'm givingyou guys a free resource.
I have a 1099 decision tree that I cameup with in Canva that is completely free.
I will post it in the show notes.
(08:55):
You can hold onto it for next yearso that you can take a look at this.
Again, like I said, I will look at the newrules next year and try and update this.
So again, we wanna askourselves if we paid them $600.
During the tax year, so firstof all, compile a list of
people you've paid for services.
This includes social media managers.
This includes people whohave painted your house.
That is a service.
(09:16):
It is not a product thatincludes people like plumbers,
that includes all those people.
Compile that list of people who you'vepaid $600 or more during the tax year.
You should start doing this in Novemberof the year prior, so this year, in
2025, as of November, compile thatlist of people you've paid $600 or more
to during the tax year that have donea service, start getting their W9s.
(09:40):
If you don't already have them andgetting their information, you're ready.
Come January, because if you wait untilJanuary, I will tell you right now,
there are so many people that are doing.
Everything else that you probablywon't get their W9 in time.
So bug them until you get their W9and then you can go ahead and do that.
Now the next question you need to askyourself is how much did you pay them?
(10:07):
So how much did you pay them?
You have four different waysusually that you pay someone.
So you have credit cards and debit cards.
First of all, if they pay through a creditor debit card, and this is like a direct
payment through a credit or debit card.
This is not through a payment processor.
This is not through anysort of other thing.
This is a direct payment into yourbank with a credit or debit card.
(10:30):
So it could be like a Chasepayment processor, it could
be something like that.
If they pay you directly witha CH credit card or debit
card, there's no 1099 needed.
Whoever the credit card companyis, whether that's Amex or
Capital One or whatever, will.
Owe them a 1099 K. So you do notneed to send them a 1099 if you send
them a 1099 when it is not needed.
(10:52):
I just want you to beaware of what's going on.
If you send someone a 1099 and it'snot needed, they now have to double
report income because whatever 1099you receive, you have to report.
If you don't report it onyour taxes, the IRS could.
Flag you for an audit.
You're much more likely to get flagged foran audit actually, because they've already
received that document saying that youearned that income and you not recording
(11:14):
that on your taxes to them is like, , whyare you trying to hide income from us?
So if you do not owe someonea 1099, do not send it.
And if you are unsure, makesure you get the actual feedback
you need before you send them.
I will be honest, 110% honest with you, Igot to this year that I did not need and.
It can, it can hurt someone because theywill owe more taxes than they need to.
(11:37):
So the next thing you also wannathink about is payment platforms.
So if they paid you throughStripe, they paid you through
Square, they paid you through.
HoneyBook, they paid you through Dubsado,whatever those payment platforms are.
So if you're going through someone'spayment platform, like my clients
all go through a payment platform,you do not owe them a 1099.
(11:58):
The payment platform company,again will send them a 1099 K
that records their entire income.
So you don't need to send them one.
And that's only with goodsand services because PayPal
will cover goods and services.
But that's what we'regonna talk about next.
The other side of that is paymentplatforms, which is why specifically
many bookkeepers and CPAs tellyou not to use these is Venmo,
(12:23):
PayPal, cash app, things like that,that you pay friends and family.
You will need to send a 1099 for those.
And then of course if anybody pays youdirectly through bank transfer, ACH,
Zelle or cash, you will owe them a 1099.
Zelle is a payment processor,but they take no responsibility.
They're literally just a connector betweenbanks, so they don't actually send 1099
(12:48):
Ks and they aren't responsible for that.
If you send them a bank transfer in ACHfor example, you know, I use, I send my
parents money sometimes, or my parentssend me money sometimes through Zelle
and they, it, it was business moneythat would be a, that would need a 1099.
So those are your four key key categories.
If you guys are like, Hey Samantha,you missed one, please let me know
(13:11):
because I will 110% be happy to tellyou if it does need a 1099 or not.
And add it to the decision tree for you.
Now, if you have gone through that listand you're like, Hey, they've paid me
via Venmo, friends and family, or they'vepaid me via Cash Bank transfer, a CHZ,
check, whatever it is, and they need a1099, you're like, yes, they need a 1099.
(13:35):
They paid me $600.
They paid me this way.
They need one.
The next question you need to ask yourselfis what type of business they are.
So there are two types of businessthat do not require you to send a
1099 unless they are a law firm.
So a C Corp or a corporation or anS corp, which means someone who's
(13:55):
an LLC tax as an S corp becauseit is an election and S Corp is
technically not like a separate entity.
They're an LLC that is taxedas an S corp. They do not need
1099 unless they are a law firm.
So if they are a law firm, youstill need to send 'em a 10.
And regardless if they're an S corp, Idon't know the rules around that, but
I know that law lawyers definitely needthat more than, other people probably
(14:19):
for an accountability factor as well.
I. However, if they are sole propor single member LLC, which most
of the people in our industryis, then they need a 1099 again.
But that's only if they pay you directlybecause there's so many different payment
processors nowadays, especially withthings like Thrive Cart, which go through
Stripe, ada, which goes through Stripe.
(14:39):
Any of those things that go throughStripe are already gonna send you one.
Now the last question of course, again,I wanna just go over this, you wanna ask
yourself is what did you pay them for?
Services or products or goods?
So technically you could just get alist of people you paid $600 to, but
if you wanna start off just gettinga really easy list, you would just
do services and then go from there.
(15:02):
It is very important that you rememberthese rules because a lot of times
people either leave out the 1099's, theyactually need to send or send 1099's.
They don't even need to send, and ofcourse, sending 1099's costs you money.
You really just want to be mindfuland think about who you actually
owe 1099's to and who you don't.
(15:24):
Of course, again, staying on topof this will protect your business.
It'll prevent the IRS from comingafter you, and it just helps you to
stay a little bit more organized.
Like I said, the best thing youcan do today is to start getting
organized as early as possible.
If you're looking through yourbooks and you see that you have
people that are missing W9s.
Reach out to them as early as possible,get those W9s so that by the end
(15:47):
of the year you're not panicking.
I know I said November, but theearlier you start, the better.
And if you wanna implement that in youronboarding process and say, here's my W9.
Or if you're working with aprovider, say, Hey, can you
give a W9 before you pay them?
That would be the best thing for you.
If you enjoyed this episode,remember to follow us on whatever
platform you're listening on.
(16:08):
Leave a review and share with a friendwho might find this information valuable.
Remember that 1099's are anessential part of business, but
they don't have to be scary aslong as you have all of your facts.
As always, I wish you a fantasticweek and we'll see you next week.
Farewell fellow travelers.
Welcome to CreativeMind Smart Money, the podcast where
creativity and business smarts collide.
I'm your host, Samantha Eck,bookkeeper, business coach, and
your go to guide for building thecreative business of your dreams.
Whether it's mastering your money,streamlining your systems, or growing
your business, I'm here to shareinsights that empower you to thrive.
Plus, I'll be bringing in industryexperts to dive into all aspects
(00:22):
of entrepreneurship, so you canturn your passion into profit
without losing your creative spark.
Let's get started
You are listening to the CreativeMinds Smart Money Podcast, and on
today's episode, we're coveringa much needed topic, 1099's.
This is an episode you're gonna wanna keepin the back of your pocket for when next
year rolls around, because January is.
(00:45):
Always counts when it comesto 1099's and nobody can ever
figure out who they're owed to.
So today I am gonna give you the factsas straight as possible, as well as a
completely free resource with no stringsattached, that you can utilize next
year to file your 1099's with ease.
So first of all.
(01:05):
1099s are necessity for anybusiness owner who uses any type
of service provider, contractor.
You rent space, you pay royalties.
There's so many differentaspects to it that.
We just kind of have togo over all of them today.
So according to the IRS businessesneed to file a 1099-NEC, so it's NEC
(01:32):
for each person to whom you have paidat least $600 in services performed
by someone who's not your employee.
So if you hire me.
If you hire a social media managerthat is someone who's been paid $600.
Now there are exceptions to that andI will get to it, so, but let's kind
of just talk about who we need topay and payments to an attorney, cash
(01:56):
payments for fish, things like that.
But.
Very specifically, you do not owe1099 to people you pay product like
you spend and buy products from.
So if you buy it from someoneon faire, you buy from a local
vendor, something like that.
You do not owe them a 1099.
It is only for those who do services.
(02:17):
And this is specifically because the IRSwants to see what people are being paid.
And that sounds a little bit scary.
There is another 1099you need to be aware of.
It is called the 1099 MISC.It is required for each person
that you've paid throughout theyear, at least $10 in royalties.
(02:37):
And royalties will include thingslike if you are a bookish goods
vendor and you sell Sarah J Maasproducts, that is a royalty product.
So if you pay her.
Publishing company royalties.
Technically you wouldneed to send them a 1099.
(02:58):
It also pertains to rents any prizes,other income bartering like we had
talked about, things like that.
Those are also on a 1099 MISC.There are very common misconceptions
about who needs to file a 1099.
So I wanna be as plain and simplefor you in this moment right now.
(03:20):
like I mentioned, I will begiving you a free resource that
you can utilize year after year.
Obviously, rules are changing andI'll try and keep it up to date, but.
The first thing you need to askyourself when you're thinking of
any service provider and who youneed to pay is, did you pay them
$600 or more during the tax year?
(03:41):
So for example, me, mypackages start at $500.
So if we work together forat least two months, you're
already going to owe me a 1099.
But the next question you need toask yourself is how you pay them,
because depending on certain rules.
You might not be owing them a 1099.
It might be their payment processor.
(04:01):
It might be someone elsethat owes them a 1099.
So you have to kind of watch out for that.
So this is where the misconceptioncomes in, where everybody claims
that they just need to send a 1099to anybody they've worked with that
has services, but it's just not true.
So who needs to file a 1099?
Of course, again, it is.
Anybody that is working with a serviceprovider, that they pay them over $600.
(04:26):
So common mistakes that I seeand ways to make this whole
process easier, first of all.
You need to get a W9 from everyservice provider regardless of
their classification, their businessclassification, regardless of
how you pay them, just to makesure you have your butt covered.
Essentially, this W9 is going to beon your records for your bookkeeper
(04:49):
or whoever to know how to file them.
Now if you are like, okay, I don't wantto send it because this person always
sends me 1099, even though they don'thave to, I understand your situation.
Please explain that to the personyou're working with or to their CPA or
whatever, just to make them understand.
But if at all possible, alwayssend a W9 or always get a W9
(05:13):
before any payments are made.
This is so important because if,for example you pay someone $600,
they do require a 1099 and you don'thave their W9, you could be at risk
for paying whatever taxes they owe.
So it's so, so, so important.
I. The second thing isincorrect information.
(05:34):
So whether they have an incorrectEIN or tax identification number, or
they have an incorrect address, youneed to always check in on that and
make sure that those are correct.
A lot of places will help youe-file nowadays, so it's just
really easy to get these done.
It's just a matter of making sure youhave your information correct and then.
Of course, everyone does assume thatevery third party handles 1099's,
(05:58):
but not every third party does.
So before we get into allof the like nitty gritty of.
Who needs to pay, whether or not we wannaask ourselves when and how do we file.
So as of January 1st, everyyear your 1099's should be open.
They don't open for e-file, I believe,until like halfway through the month.
(06:19):
So if you wanna e-file them, youkind of have to wait, but you can
already get them prepped and in thesystem to e-file the day it opens.
Better early than never,I would say in this case.
As of the first, you should haveeverything that you need to file.
Get all of your information upfront.
Make sure you have everythingthat you need to file.
Go to a website, whetherthat's QuickBooks Track 1099.
(06:43):
Tax 1099, and if this is too overwhelmingfor you, feel like, I don't know
who needs a 1099, I can't handle it.
That's exactly what your bookkeeperor your CPA is there for.
A lot of people do love to file their1099's themselves, and some people
actually miss 1099's for certainpeople, but it's completely up to
(07:03):
you who, and why you wanna do that.
Once you file, they will send eithera mail out notification to whoever
you owe to, or they will send.
An e-file email and then they'll alsoe-file on be on your behalf to the IRS.
So there's really not a lot thatyou have to do, but you need to
have all the information upfront.
(07:25):
Sometimes it can be a little bit difficultto like figure out where things go,
which is why working with a bookkeeper orworking with someone else who knows kind
of what those forms look like can help.
But sometimes they can geta little bit complicated.
1099's are due by January 31st.
I believe the exceptionis miscellaneous ones.
I think miscellaneous ones aredue by the our March because I
(07:46):
think rent ones are different.
I'm not a hundred percent sure on that.
Don't quote me.
1099's themselves, I would alwaysjust file them by January 31st
entirely, because that is what I'veknown and always been told, is the
deadline, if you don't file by the31st, you can actually get penalized.
So for one thing, if youfile your taxes and you.
(08:10):
Say that you had to pay services,but you didn't send out 1099's,
they will penalize you, and youcan pay large amounts of fees.
Everybody's like, oh, no,they're not, they're not that
bad that you can pay fees.
They may audit you because they maynot understand, and if you don't have
correct information, or you don'thave SSNs or EINs or TIN numbers.
They can actually, like I said, sendyou a notice and then charge you for
(08:34):
the taxes that are owed by this person.
So you wanna make sure thatyou are all up to date there.
now that we've kind of gone over allof the nitty gritty, I really wanna
talk about who needs a 1099 and why.
And like I said, I'm givingyou guys a free resource.
I have a 1099 decision tree that I cameup with in Canva that is completely free.
I will post it in the show notes.
(08:55):
You can hold onto it for next yearso that you can take a look at this.
Again, like I said, I will look at the newrules next year and try and update this.
So again, we wanna askourselves if we paid them $600.
During the tax year, so firstof all, compile a list of
people you've paid for services.
This includes social media managers.
This includes people whohave painted your house.
That is a service.
(09:16):
It is not a product thatincludes people like plumbers,
that includes all those people.
Compile that list of people who you'vepaid $600 or more during the tax year.
You should start doing this in Novemberof the year prior, so this year, in
2025, as of November, compile thatlist of people you've paid $600 or more
to during the tax year that have donea service, start getting their W9s.
(09:40):
If you don't already have them andgetting their information, you're ready.
Come January, because if you wait untilJanuary, I will tell you right now,
there are so many people that are doing.
Everything else that you probablywon't get their W9 in time.
So bug them until you get their W9and then you can go ahead and do that.
Now the next question you need to askyourself is how much did you pay them?
(10:07):
So how much did you pay them?
You have four different waysusually that you pay someone.
So you have credit cards and debit cards.
First of all, if they pay through a creditor debit card, and this is like a direct
payment through a credit or debit card.
This is not through a payment processor.
This is not through anysort of other thing.
This is a direct payment into yourbank with a credit or debit card.
(10:30):
So it could be like a Chasepayment processor, it could
be something like that.
If they pay you directly witha CH credit card or debit
card, there's no 1099 needed.
Whoever the credit card companyis, whether that's Amex or
Capital One or whatever, will.
Owe them a 1099 K. So you do notneed to send them a 1099 if you send
them a 1099 when it is not needed.
(10:52):
I just want you to beaware of what's going on.
If you send someone a 1099 and it'snot needed, they now have to double
report income because whatever 1099you receive, you have to report.
If you don't report it onyour taxes, the IRS could.
Flag you for an audit.
You're much more likely to get flagged foran audit actually, because they've already
received that document saying that youearned that income and you not recording
(11:14):
that on your taxes to them is like, , whyare you trying to hide income from us?
So if you do not owe someonea 1099, do not send it.
And if you are unsure, makesure you get the actual feedback
you need before you send them.
I will be honest, 110% honest with you, Igot to this year that I did not need and.
It can, it can hurt someone because theywill owe more taxes than they need to.
(11:37):
So the next thing you also wannathink about is payment platforms.
So if they paid you throughStripe, they paid you through
Square, they paid you through.
HoneyBook, they paid you through Dubsado,whatever those payment platforms are.
So if you're going through someone'spayment platform, like my clients
all go through a payment platform,you do not owe them a 1099.
(11:58):
The payment platform company,again will send them a 1099 K
that records their entire income.
So you don't need to send them one.
And that's only with goodsand services because PayPal
will cover goods and services.
But that's what we'regonna talk about next.
The other side of that is paymentplatforms, which is why specifically
many bookkeepers and CPAs tellyou not to use these is Venmo,
(12:23):
PayPal, cash app, things like that,that you pay friends and family.
You will need to send a 1099 for those.
And then of course if anybody pays youdirectly through bank transfer, ACH,
Zelle or cash, you will owe them a 1099.
Zelle is a payment processor,but they take no responsibility.
They're literally just a connector betweenbanks, so they don't actually send 1099
(12:48):
Ks and they aren't responsible for that.
If you send them a bank transfer in ACHfor example, you know, I use, I send my
parents money sometimes, or my parentssend me money sometimes through Zelle
and they, it, it was business moneythat would be a, that would need a 1099.
So those are your four key key categories.
If you guys are like, Hey Samantha,you missed one, please let me know
(13:11):
because I will 110% be happy to tellyou if it does need a 1099 or not.
And add it to the decision tree for you.
Now, if you have gone through that listand you're like, Hey, they've paid me
via Venmo, friends and family, or they'vepaid me via Cash Bank transfer, a CHZ,
check, whatever it is, and they need a1099, you're like, yes, they need a 1099.
(13:35):
They paid me $600.
They paid me this way.
They need one.
The next question you need to ask yourselfis what type of business they are.
So there are two types of businessthat do not require you to send a
1099 unless they are a law firm.
So a C Corp or a corporation or anS corp, which means someone who's
(13:55):
an LLC tax as an S corp becauseit is an election and S Corp is
technically not like a separate entity.
They're an LLC that is taxedas an S corp. They do not need
1099 unless they are a law firm.
So if they are a law firm, youstill need to send 'em a 10.
And regardless if they're an S corp, Idon't know the rules around that, but
I know that law lawyers definitely needthat more than, other people probably
(14:19):
for an accountability factor as well.
I. However, if they are sole propor single member LLC, which most
of the people in our industryis, then they need a 1099 again.
But that's only if they pay you directlybecause there's so many different payment
processors nowadays, especially withthings like Thrive Cart, which go through
Stripe, ada, which goes through Stripe.
(14:39):
Any of those things that go throughStripe are already gonna send you one.
Now the last question of course, again,I wanna just go over this, you wanna ask
yourself is what did you pay them for?
Services or products or goods?
So technically you could just get alist of people you paid $600 to, but
if you wanna start off just gettinga really easy list, you would just
do services and then go from there.
(15:02):
It is very important that you rememberthese rules because a lot of times
people either leave out the 1099's, theyactually need to send or send 1099's.
They don't even need to send, and ofcourse, sending 1099's costs you money.
You really just want to be mindfuland think about who you actually
owe 1099's to and who you don't.
(15:24):
Of course, again, staying on topof this will protect your business.
It'll prevent the IRS from comingafter you, and it just helps you to
stay a little bit more organized.
Like I said, the best thing youcan do today is to start getting
organized as early as possible.
If you're looking through yourbooks and you see that you have
people that are missing W9s.
Reach out to them as early as possible,get those W9s so that by the end
(15:47):
of the year you're not panicking.
I know I said November, but theearlier you start, the better.
And if you wanna implement that in youronboarding process and say, here's my W9.
Or if you're working with aprovider, say, Hey, can you
give a W9 before you pay them?
That would be the best thing for you.
If you enjoyed this episode,remember to follow us on whatever
platform you're listening on.
(16:08):
Leave a review and share with a friendwho might find this information valuable.
Remember that 1099's are anessential part of business, but
they don't have to be scary aslong as you have all of your facts.
As always, I wish you a fantasticweek and we'll see you next week.
Farewell fellow travelers.
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