The 1099 Guide for Boutique Owners

Why do I need to issue 1099s?

The Internal Revenue Service requires that businesses file Form 1099-NEC to record payments made to independent contractors who were paid $600 or more. The post-mark date is January 31st each year.

Who gets a 1099?

1099-NECs are issued to all service providers who receive $600 or more in payment for the year. The best thing to remember when it comes to determining who will receive a 1099 is service versus product. If the vendor is providing a service – that is subject to a 1099.

Examples:

Subcontractors

Web Designers & Developers

Bookkeepers

Accountants/CPA

Lawyers

Consultants

Maintenance Workers

Photographers

Models

Social Media & Graphics

Makeup Artists

SM Influencers

Spot Labor

Does it matter how I paid the vendor?

All payments made by check, cash, bank or ACH debit count towards the amount of a 1099. Also, the value of all payments made in clothing or gifts is to be included in the amount of a 1099.

What is needed to issue a 1099?

You will need a W9 for the vendor and the total amount paid to the vendor for the services provided.

When do I collect a W9?

The best practice is to request a W9 from every contractor and person PRIOR to giving them money. That’s the quickest way to get a W9 from them – even if you are not sure you will pay them over $600. Some service providers will refuse to complete a W9 to avoid taxes. Collecting the W9 before payment is the best way to prevent this.

Do I have to issue a 1099 to my Landlord?

Paid rent to a non-incorporated entity is to be reported on a 1099-MISC per IRS instructions. This also includes rent to a storage facility.

What happens when we file your 1099?

Once we process and e-file the 1099, an emailed copy will be sent to you of all 1099s for your records. A paper copy will be mailed via USPS to you and the recipient per IRS requirement. We are also able to email a copy to recipients when email address is provided.