Most businesses must send 1099s to non‑employees they paid for services during the year, typically when total payments to that person or business are at least 600 dollars and they are not a regular W‑2 employee.

Core rule in plain English

In general, your business should issue a 1099 (usually Form 1099‑NEC, sometimes 1099‑MISC) to:

  • Any independent contractor, freelancer, or service provider you paid 600 dollars or more for business services during the year.
  • Certain landlords (for rent), attorneys, and a few other special categories, even if they operate as corporations in some cases.

You do not issue a 1099 to your employees (they get a W‑2 instead).

Who usually gets a 1099 from your business

Think through everyone your business paid for work, not wages:

  • Independent contractors and freelancers
    • Designers, developers, consultants, bookkeepers, marketers, virtual assistants, etc., who are not on payroll.
* Must generally get Form 1099‑NEC if you paid them 600 dollars or more for the year.
  • Service‑type vendors
    • Repair and maintenance people, IT support, cleaning services, subcontractors, and similar providers you pay directly.
* Again, apply the 600‑dollar threshold and the business type rules below.
  • Attorneys (law firms and solo lawyers)
    • Certain payments to attorneys must be reported even if they are corporations, and can show up on 1099‑NEC or 1099‑MISC depending on the payment type.
  • Landlords / rent recipients
    • If your business pays 600 dollars or more in rent to a non‑corporate landlord, the landlord may need a 1099‑MISC.
  • Royalties and specific “miscellaneous” payments
    • Royalties of 10 dollars or more and some other specialized payments are reported on 1099‑MISC.

Who usually does not get a 1099

Certain categories are typically excluded:

  • Employees
    • Anyone on your payroll with taxes withheld gets a W‑2, never a 1099 for their wages.
  • Corporations (with important exceptions)
    • Most C corporations and S corporations do not receive 1099‑NEC for service payments.
* Exceptions include some payments to attorneys and medical or health‑care providers, which may still require 1099 reporting.
  • Pure product purchases
    • Buying inventory or goods from a store (for example, a hardware or lumber store) usually does not trigger a 1099 requirement because you’re buying products, not services.
  • Payments via credit card or third‑party platforms
    • If you paid the vendor by credit card or certain payment processors, those processors may handle reporting on Form 1099‑K, so you usually do not also issue a 1099‑NEC for the same payments.

How to decide: practical checklist

Many tax pros suggest using this decision path for each payee:

  1. Was the payment for your business (not purely personal)?
    • If it was personal, you generally do not send a 1099.
  1. Is the person an employee?
    • If yes, they get a W‑2; stop here.
  1. Did you pay 600 dollars or more for services during the year?
    • If no, a 1099 is usually not required (with a few exceptions like 10‑dollar royalty thresholds).
  1. What is their business type (from their W‑9)?
    • Sole proprietor, single‑member LLC, partnership, and many multi‑member LLCs: often need a 1099 if other tests are met.
 * C corp or S corp: usually no 1099, except for attorneys and some medical/health payments.
  1. How did you pay them?
    • Direct check, ACH, cash, or Zelle‑type transfers you initiated: often your responsibility to issue 1099‑NEC/1099‑MISC.
 * Credit card or certain third‑party platforms: those processors often issue 1099‑K instead.

Collecting and reviewing Form W‑9 from each contractor or vendor is the standard way to know their tax classification and whether a 1099 is needed.

Timing and penalties to keep in mind

  • 1099 forms for non‑employee compensation are generally due to the recipient and the IRS by January 31 for the previous tax year.
  • Missing forms, filing late, or filing incorrectly can lead to per‑form penalties that grow the later you file.

Because 1099 rules have nuances and change over time, it is wise to confirm your specific situation with a qualified tax professional or your accountant before filing.