You need to send Form 1099-NEC to your subcontractors, you must first ensure you meet the filing requirements, prepare the form using their information, and then distribute Copy B to them by the annual deadline.  (January 31)

Our bookkeeping services take care of 1099 preparation and filing with the IRS, while ensuring your business and subcontractors receive the appropriate documentation.

Before the subcontractor begins to work for you, getting a Form W-9  should be a prerequisite and it is the best way to collect the correct name, address, and taxpayer identification number (TIN) needed to fill out a Form 1099.
Why You Need a W-9
  • Accurate Data: It ensures you have the contractor's legal name, business classification, and Social Security Number (SSN) or Employer Identification Number (EIN).
  • Penalty Protection: While you legally only need their tax ID to file a 1099, having a signed W-9 protects your business from IRS fines if the information turns out to be wrong.
  • Backup Withholding: If a contractor refuses to give you a TIN, the IRS requires you to withhold backup taxes (currently 28%) from their payments.
Key Rules to Remember
  • Get It First: Always ask the contractor to complete the W-9 before you send their first payment.
  • Do Not File It: Keep the W-9 in your secure files for at least four years. You do not send it to the Internal Revenue Service.
  • Filing Threshold: You must issue a 1099-NEC if you pay a non-employee $600 or more in a calendar year (though check current inflation adjustments or local rules if thresholds change).

Requirements
You generally must issue a Form 1099-NEC if all of the following are met for the tax year:

You made a payment to someone who is not your employee.

The payment was for services in the course of your trade or business.

You made payments totaling $600 or more to an individual, partnership, or LLC not taxed as a corporation.

The payments were made by cash, check, or ACH transfer (payments made via credit card or third-party payment processors like PayPal or Stripe are generally reported by the processor on Form 1099-K).