Simply put, sometimes. The Internal Revenue Service does not require businesses to report all payments that you make to an independent contractor with a 1099. Once you determine how to organize payments made to all recipients with trustworthy software, you will have an easier time staying compliant. Make sure you know when to report your payments using the form to avoid unnecessary complications for the business and your hired contractors.
Use a Form 1099-MISC or Form 1099-NEC if your business reports payments to a vendor for:
- Rent
- Royalty fees
- Prizes
- Non-employee compensation
Only use a 1099 form when you work with vendors who are either classified as individuals, sole proprietors, or partners. Do not issue a 1099 form for a corporation. The IRS does not require you to file a 1099 either if you pay a vendor with a credit card. Attorneys are one exception. You should send them a Form 1099 whether or not their firm is incorporated.
We handle 1099 reporting and filing with our core W2/1099 Forms Filer software and optional add-on E-File module. Download our free 1099-etc Demo software to see how our base product integrates with five additional types of add-on modules.