Use a Form 1099-NEC to report the income that you paid for a consulting service. Businesses must send a form to consultants that they paid $600 or more in the last tax year. It is important to understand the types of workers or businesses that you must classify as offering consulting services, including:
- A consultant who offers you professional or expert advice on a matter (they can operate independently as an individual contractor)
- A consultant who is an employee of a consulting company
Your business must file 1099 forms for either employment scenario since the worker is not your employee. In 2025, MBO Partners found that there are 72.9 million independent contractors in the United States and that Gen Z accounts for 28% of that independent workforce. Using 1099 software can streamline how you file forms by making the process significantly more efficient.
People Also Ask
- Can payroll software generate year-end payroll reports, including W2s and 1099s? – Yes, comprehensive software will make it easy for businesses to generate year-end reports. These reports will allow you to see if your business needs to make or could benefit from making changes in the upcoming tax year.
- Is software as a service reportable on a 1099 form? – No, a vendor is responsible for reporting your payments for software that has an established time limitation (renewal requirements) in the same way that they would report rental income on a 1099-MISC.
We handle reporting 1099 income programmatically with our W-2/1099 Forms Filer software. Download our free 1099-etc Demo software today to enter your data and discover electronic filing options found in our E-File system.