Do you wonder if you should be sending 1099s to vendors?
1099s are paid to any non-employee that you hired to do work for you that meet the following qualifications:
- You paid for Business Services or Rent (over $600), or Royalties (over $10). Purchases of physical products are exempt.
- You paid them through your Bank Account (Cash, Check, ACH, ETF, Zelle, Cash App, etc). If you paid via Credit Card, Debit Card, Business PayPal or Business Venmo, you are off the hook! The payment processors will send those 1099s if they meet the threshold requirements.
- They are NOT a Corporation. You are only required to issue 1099s to sole proprietors and LLCs (unless they are lawyers…you do need to send a 1099 to lawyers regardless of incorporation status).
Check out this decision tree for a visual of when to send a 1099!