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. Make sure you know when to report your payments using the form to avoid any 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:
- Royalty fees
- 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.