1099s Made Easy:

A Down & Dirty Guide

If you’re a business owner who pays contractors, freelancers, or the occasional mysterious “consultant” who appears on your bank statement like a ghost… congratulations. You’ve officially entered the world of 1099s.

And if you’re already feeling the stress creep in, you’re not alone. Every year, we see the same pattern:

• Business owners realize too late they need W-9s
• Vendor lists become a chaotic mess of “Wait… do I send one to them?”
• Someone gets paid through PayPal or Stripe and now everyone’s confused
• Deadlines pop up like jump scares
• And suddenly January becomes “1099 Season: The Reckoning”

But here’s the truth: 1099s are annoying, not impossible. You don’t need to be a tax expert or IRS whisperer to get them done. You just need a simple process and a little structure.

This guide is designed for businesses with contractors and multiple vendor types. It’s high-level, fast, and intentionally practical, so you can:
✅ figure out who needs a 1099
✅ gather what you need
✅ file correctly
✅ and meet deadlines without panic-sweating over a W-9 at midnight.

Let’s make it easy.

Step 1: Identify who needs a 1099 (and who does not)

This is the step where most business owners either send too few and risk penalties, or send too many and create chaos for themselves and their vendors. So we’re going to keep it simple.

You generally issue a 1099 to a vendor if:

• You paid them $600 or more during the year
• You paid them for services (not goods)
• You paid them by cash, check, ACH, wire, or direct bank transfer
• They are not your employee
• They are not a corporation (with a few important exceptions)

You generally do not issue a 1099 if:

• You paid them by credit card
• You paid them through PayPal, Stripe, Square, Venmo business, or another third-party processor
• You bought physical goods/products (inventory, materials, supplies for resale)
• They are a C corporation or S corporation (usually)
• You paid them less than $600 total for the year

That’s the high-level framework. Now let’s apply it to the most common vendor types you’ll see in real life.

Independent Contractors and Freelancers

If you paid an independent contractor $600 or more for services using cash/check/ACH, you’ll typically issue a 1099-NEC (Nonemployee Compensation). This includes virtual assistants, marketing freelancers, designers, bookkeepers, consultants, IT support, project-based contractors, and basically anyone you hired who is not on payroll.

Attorneys and Law Firms

Lawyers are one of the biggest exceptions to the “corporations don’t get 1099s” rule. Even if an attorney is incorporated, you may still have to issue a 1099 depending on the type of payment. Attorney fees can require a 1099, and gross proceeds paid to attorneys can also require one. Translation: don’t assume “they’re a corporation” means you can skip it.

Rent Payments

If you pay rent for business property and you pay the landlord or property owner $600 or more by check/ACH, it is typically reported on a 1099-MISC. Rent paid via credit card or through a payment platform usually shifts reporting responsibility away from you, so you want to be careful about double-reporting.

Medical and Healthcare Providers

Payments to medical or healthcare providers can require a 1099 if they meet the thresholds and payment method rules. Yes, even if they are incorporated in some cases. This is one of those categories where it’s smart to treat it as a “don’t assume” zone and confirm via the W-9.

Prizes and Awards

If you give prizes or awards to a vendor or individual (not employees) and it hits $600 or more, it typically triggers 1099 reporting.

Referral Fees and Commissions

If you paid someone for referral services, commissions, or finder’s fees, it is typically reported on a 1099-NEC. This is common in real estate-adjacent industries, marketing, insurance, consulting, and service businesses.

Vendors Paid through Credit Card or Payment Processors

This is one of the most common 1099 mistakes we see. If you paid a vendor via credit card, PayPal, Stripe, Square, Venmo business, or any third-party settlement processor, you generally do not issue a 1099. Those platforms typically issue a 1099-K when applicable. If you send a 1099 anyway, you risk creating confusion for the vendor and creating IRS mismatches.

Goods-based Vendors (physical products)

If you’re buying inventory, merchandise, raw materials, or supplies from someone, it is generally not 1099-reportable because you’re not paying for services. However, if a vendor sells you goods and also provides services like installation, repairs, design work, or labor, you may need to separate the service portion depending on how the invoice is structured.

The LLC Confusion Warning

An LLC does not automatically mean “no 1099.” LLCs can be taxed as sole proprietors, partnerships, S corporations, or C corporations. So the only way to know how they should be treated is to review their W-9. Which brings us to Step 2: collecting W-9s before you do anything else.

Step 2: Collect W-9s Before You Do Anything Else

If Step 1 is where you figure out who might need a 1099, Step 2 is where you get the information you need to actually file them. And this is the part that most business owners skip until mid-January, at which point it turns into a scavenger hunt with no prize.

Here’s the truth: you cannot file accurate 1099s without accurate W-9s.
And the IRS doesn’t care that your contractor “never checks email.”

So if you want 1099 season to be fast, clean, and stress-free, this is your non-negotiable step.

What is a W-9 and Why do you Need It?

A Form W-9 is the vendor’s official tax ID information. It tells you:

• their legal name and business name (if different)
• their federal tax classification (sole prop, partnership, corporation, etc.)
• their address
• their Taxpayer Identification Number (TIN), which is either an EIN or SSN

You use this information to prepare 1099 forms. If the information is wrong, incomplete, or missing, your 1099 will be wrong, and that’s when you get to enjoy correction forms, vendor complaints, and potential IRS notices.

When Should you Collect a W-9?

The best answer is: before you pay them.

The most realistic answer is: as soon as possible.

A good rule for businesses with multiple contractors and vendor types is:

• Collect a W-9 from any vendor you may pay for services
• Do it at onboarding or before the first payment
• Do not wait until year-end to ask

Because vendors who are responsive in October become “missing persons” in January.

Who Should you Request W-9s From?

You don’t need to request a W-9 from everyone you pay. Keep it focused on vendors who are likely 1099-reportable.

Request a W-9 from:

• independent contractors and freelancers
• consultants and service providers
• repair and maintenance vendors
• marketing agencies and creatives
• IT support
• professional services providers (including attorneys)
• landlords/property owners if you pay rent by check/ACH
• healthcare providers if applicable to your business
• anyone you pay for services that could reasonably cross the $600 threshold

If you’re unsure, request the W-9 anyway. Collecting it doesn’t mean you’re committing to sending a 1099. It just means you’re not scrambling later.

The Most Common W-9 Mistake: Confusing Business Type

This is why you don’t want to rely on assumptions like:

• “They’re an LLC so no 1099”
• “They’re a business so they’re exempt”
• “They have a logo and a website, so they’re definitely incorporated”

None of that matters.

The W-9 tells you the vendor’s tax classification. That classification impacts whether a 1099 is required, so you need it documented.

How to Request a W-9 (the practical way)

Make it part of your vendor onboarding process. Treat it like a business requirement, not a favor.

Here’s the simplest approach:

1. Send a W-9 request before the first payment
2. Explain that it is required for tax reporting
3. Set a deadline
4. Do not release payment without it (if you can help it)

If you want language you can copy and paste:

W-9 Request Email Template (Short and Simple)

If you want it even more direct:

You don’t need to overexplain. Most vendors have done this before. If they act confused, it’s usually because they don’t want to hand over their tax ID. Which brings us to the fun part.

What if a Vendor Refuses to Provide a W-9?

This happens more often than you’d think.

Some vendors genuinely don’t understand what it is. Others are trying to avoid being tracked. Either way, you still need to protect your business.

Your options are:

1. Be firm and require it
   If they want to get paid, they provide a W-9. Simple.
2. Explain it’s standard compliance
   Sometimes vendors push back because they think you’re asking for something unusual. Remind them it’s an IRS form used for year-end reporting.
3. Backup withholding (the serious answer)
   If a vendor refuses to provide a TIN, technically you may be required to begin backup withholding on payments (withholding a percentage and remitting it to the IRS). Most small businesses don’t do this in practice because it adds complexity, but it is part of the compliance framework.
   **If you’re in this situation, it’s a strong signal you should involve your accountant.
4. Stop paying them
   If a vendor won’t provide a W-9 and you continue paying them, you’re accepting unnecessary risk. It’s not worth it.

What if a Vendor Gives you the Wrong Information?

Also very common.

Here are the most frequent issues:

• misspelled legal name
• business name doesn’t match tax records
• they use a nickname or DBA without listing the legal entity
• they provide an SSN when they meant EIN (or vice versa)
• they check the wrong tax classification box
• they leave the TIN blank

Your job isn’t to audit them, but you do need to make sure it looks complete and usable.

At minimum, confirm:

• a name is filled in
• a tax classification box is checked
• the address is complete
• the TIN is provided
• the form is signed

If something is missing, send it back immediately and request a corrected version.

Where to Store W-9s (without creating a compliance issue)

W-9s include sensitive information. They contain SSNs and EINs, so you want to store them securely. This is not something you want floating around in email threads or saved on someone’s desktop named “W9_final_final_REAL.pdf.”

Best practices:

• store W-9s in a secure client portal or encrypted file storage system
• limit internal access to only team members who need it
• keep vendor documents organized by year
• do not store them in open Google Drive folders with broad permissions
• avoid printing them unless necessary

If you use a portal or document management tool, this is a great place to standardize your process.

Pro Tip: Create a “W-9 required” Rule for your Business

If you want to make 1099 season easy every year, set a basic internal policy:

If we are paying a non-employee for services, we collect a W-9 before the first payment.

It takes 60 seconds to ask up front and saves hours of chaos later.

What You Should Have at the End of Step 2

By the time you finish this step, you should have:

• a list of vendors who might require 1099s
• a W-9 on file for each one
• correct business names and tax classifications
• TINs ready to plug into your filing system
• a clear process for collecting missing forms

Once you have that, the rest of 1099 season becomes a lot less dramatic.

Step 3: Pull Your Totals and Separate What Counts (and What Does Not)

This step is where 1099s are either handled cleanly, or they go completely off the rails. Because even if you identify the right vendors and collect all your W-9s, you still have to answer one key question:

How much did you actually pay each vendor during the year, and were those payments 1099-reportable?

This is also where most business owners make the biggest mistakes:

• including payments that should not be included
• excluding payments that should be included
• forgetting to separate credit card and third-party payments
• lumping everything together and hoping for the best

So the goal of Step 3 is simple: pull a clean list of vendor totals and separate them into the correct buckets.

Start with Your Accounts Payable or Expense Records

Where you pull totals from depends on how your business tracks payments.

Common sources include:

• your accounting software vendor reports
• your accounts payable system
• your bank transaction history
• your bill pay or ACH platform
• your bookkeeping spreadsheets (if you’re running things manually)

If you use accounting software, your best friend is usually a Vendor Payment Summary, Expense by Vendor, or 1099 Report.

If you don’t use accounting software, you’ll likely need to create a simple spreadsheet using bank transactions, but it’s still doable. The key is accuracy.

The Number One Rule: Payment Method Matters

This is the part that trips people up, so let’s make it extremely clear.

You generally include payments on a 1099 only if they were paid via:

• cash
• check
• ACH
• wire transfer
• direct bank transfer
• certain bill pay systems (depending on whether the payment is considered a third-party transaction)

You generally do not include payments that were made via:

• credit card
• PayPal
• Stripe
• Square
• Venmo business
• other third-party settlement networks

Why? Because those payment processors typically issue Form 1099-K when applicable.

That means if you include those payments on your 1099-NEC, you may be double-reporting income for that vendor. It creates confusion for them and creates unnecessary risk for you.

So before you add up totals, you need to separate the payment methods. This is the difference between “smooth filing” and “correction forms later.”

Step 3A: Make Your Vendor List

Start with your list of vendors who may be 1099-reportable.

Pull all vendors you paid during the year and filter down to those who meet these criteria:

• services-based vendors
• individuals, sole proprietors, partnerships, and LLCs taxed as those
• not employees
• paid $600+
• paid by check/ACH/cash/wire/direct transfer

If your accounting software provides a 1099 report, it may already filter this list, but do not treat it as perfect. Software can only work with the data it’s been given. If vendor classifications were entered incorrectly, the report can be wrong.

Step 3B: Pull the Total Payments by Vendor

Now run a report that shows total paid per vendor for the year. You want something that includes:

• vendor name
• total payments
• payment dates
• payment method (if available)

In an ideal world, you’re looking at a clean report you can export into Excel or Google Sheets.

Then you review vendor-by-vendor and confirm:

• the totals are correct
• payments were for services
• payments were not made entirely through a processor
• the vendor meets the $600 threshold

Step 3C: Separate Payments that Should Not Be Included

This is where you remove payments that do not belong on a 1099.

Here are the most common exclusions.

Payments made by credit card

If you paid a contractor using a company credit card, those payments generally do not go on your 1099. Credit card transactions are typically reported through the payment network.

This is one of the most common ways businesses accidentally over-report.

Payments made through PayPal, Stripe, Square, Venmo business, etc.

These payment platforms are considered third-party settlement organizations. In many cases, they handle tax reporting through a 1099-K.

So if a vendor was paid through these platforms:

• do not include those payments in the total you report on a 1099-NEC
• unless you know for sure the payment method used does not fall under third-party reporting rules

If you have mixed payment methods (some ACH, some PayPal), you may include only the portion paid via ACH/check/cash, and exclude the portion paid via the processor.

This is why separating payment method matters.

Payments for goods only

Purchases of physical goods typically do not require a 1099. If you buy products, inventory, merchandise, raw materials, supplies, or equipment, those are generally not included.

However, if a vendor invoice includes both goods and services, it gets trickier.

Example:

• you buy equipment and pay for installation labor
• you buy materials and pay for delivery/setup labor

In cases like this, you may need to separate service charges from product charges, depending on how the vendor invoices.

If you cannot reasonably separate, you may need to consult your accountant before filing.

Step 3D: Watch for the “LLC + Corporate” Classification Problem

A vendor may appear to be a business, but that doesn’t tell you how they should be treated for 1099 purposes.

This is why the W-9 is critical.

As you review vendor totals, confirm the vendor classification matches the W-9:

• sole proprietor
• partnership
• LLC (taxed as sole prop/partnership)
• C corporation
• S corporation

If the vendor is a corporation, they are usually exempt from receiving a 1099, but remember the exceptions:

• attorneys
• medical and healthcare payments
• certain other specialized categories

Don’t assume. Confirm.

Step 3E: Confirm You Are Reporting the Correct Category

At this point, you should also confirm which form the vendor falls under.

Most of your service-based vendors will be reported on:

• 1099-NEC (Nonemployee Compensation)

Other payments may belong on:

• 1099-MISC (rent, prizes, other income categories)

You do not need to memorize every category, but you should know the most common split:

• services to nonemployees = 1099-NEC
• rent and certain other payments = 1099-MISC

If you’re unsure, use filing software or consult your accountant. Filing tools typically guide you through selecting the correct category.

Step 3F: Double-Check your Math and Thresholds

Once you have your totals, you want to confirm:

• the vendor meets the $600 threshold
• payments included are actually reportable
• any excluded payments are properly excluded
• totals match your accounting records

This is also the moment to check for duplicates or vendor name inconsistencies.

Example:
You may have paid the same contractor under:

• “John Smith”
• “John Smith Consulting”
• “J. Smith LLC”

If those are the same person/business, you need to combine totals correctly and make sure you’re reporting under the correct legal name from the W-9.

What You Should Have at the End of Step 3

When this step is done, you should have a clean list of vendors who need 1099s, with totals that:

• meet the threshold
• include only reportable payments
• match your books
• align with vendor W-9 information

This is the point where filing becomes easy, because everything is already organized.

Step 4: Fill Out the Right 1099 Form (and Keep It Simple)

At this point, you’ve done the hard part. You’ve identified which vendors need a 1099, you’ve collected W-9s, and you’ve pulled clean totals that only include payments that should actually be reported.

Now you’re ready for the part most business owners dread: filling out the forms.

The good news is this: if your prep work is clean, this step is mostly data entry. And if you use a filing platform like Avalara's Track1099, it becomes even easier because the software walks you through the process and helps reduce common mistakes.

The key to Step 4 is choosing the correct form and entering the information correctly the first time, so you don’t have to redo it later.

The Two Most Common 1099 Forms You’ll Use

Most small businesses only deal with two forms:

Form 1099-NEC (Nonemployee Compensation)
This is used for payments to nonemployees for services, like:

• independent contractors
• freelancers
• consultants
• professional service providers

If you’re paying someone who is not on payroll and they provided services, there’s a very good chance this is the form you’re using.

Form 1099-MISC (Miscellaneous Information)
This is used for certain types of payments that don’t fall under nonemployee compensation, such as:

• rent
• prizes and awards
• certain medical and healthcare payments
• other income categories that don’t belong on 1099-NEC

For most businesses, the biggest use of 1099-MISC is rent.

A Quick Sanity Check: Don’t Use the Wrong Form

This is a common mistake because 1099-MISC used to be the form for contractor payments. That changed when the IRS reintroduced 1099-NEC.

So here’s the rule:

• Contractor and service provider payments generally go on 1099-NEC
• Rent and other miscellaneous categories generally go on 1099-MISC

If you use filing software, it will typically ask you to pick the payment category and will route it to the correct form.

What You Need to Fill Out a 1099

You will need two sets of information:

1. your business information (the payer)
2. the vendor’s information (the recipient)

Here’s what you’ll need for each.

Your business (payer) information:

• legal business name
• business address
• EIN (Employer Identification Number)
• contact information (depending on filing method)

Your EIN needs to match IRS records. If your business information changed during the year (like address or entity type), this is where you want to make sure your records are updated.

Vendor (recipient) information:

This comes from the W-9. You need:

• legal name (as listed on the W-9)
• business name, if applicable
• address
• TIN (SSN or EIN)
• total payments that are reportable
• the payment category (1099-NEC or 1099-MISC and the correct box)

If you don’t have a W-9, stop here. Filing without accurate tax ID info is how businesses end up filing incorrect forms and dealing with TIN mismatch notices.

Which Box Do You Use?

Most filing software will handle this, but it helps to know the basics.

For 1099-NEC, the most common reporting box is:

• Box 1: Nonemployee Compensation

For 1099-MISC, common boxes include:

• Box 1: Rents
• Box 3: Other Income (often used for prizes/awards)
• Other boxes depending on the payment type

You do not need to be an expert in every category. You just need to make sure the payment is being reported in the correct place. If you’re unsure, the filing software instructions are usually clear, and this is where having an accountant review your list can save you from filing corrections later.

Paper Filing vs. E-Filing (why most businesses should e-file)

If you’re only filing a couple 1099s and you love forms and envelopes, paper filing technically exists. But for most businesses, especially ones with multiple vendors, e-filing is the easiest and safest option.

E-filing reduces the risk of:

• missing fields
• incorrect formatting
• mailing delays
• lost forms
• misread handwriting
• scrambling to find the right IRS mailing address

It also makes it easier to generate recipient copies and keep clean records.

This is why platforms like Avalara and Track1099 are popular. They simplify the process and reduce administrative work, especially if you’re issuing multiple 1099s.

How Filing Platforms Typically Work (high level)

Most 1099 filing platforms follow a very similar workflow:

1. You enter your business information
2. You enter your vendor information (or import it via spreadsheet)
3. You enter vendor totals and choose the payment type
4. The software generates the 1099 forms
5. You choose how forms are delivered to vendors (mail, electronic delivery, etc.)
6. The software files with the IRS (and with states if required)

The biggest advantage of these platforms is that they often:

• validate formatting
• check for missing tax ID fields
• make corrections easier
• allow you to bulk import vendor lists
• provide confirmation records after filing

Importing Data: The Easiest Way to File Multiple 1099s

If you’re filing for several vendors, do not manually enter each one unless you have to. Most filing platforms allow you to upload a spreadsheet.

The simplest process is:

• export your vendor totals and vendor info into one spreadsheet
• clean it up so names and TINs match the W-9
• upload the file into the platform
• review for accuracy
• submit

This reduces errors and saves time.

The Most Common Errors to Avoid in Step 4

Before you finalize your forms, review for these issues:

1) Wrong vendor name
Make sure the name matches the W-9, not your internal nickname for the vendor.

2) Incorrect tax ID number
A wrong EIN or SSN triggers mismatch notices and can lead to penalties or correction requirements.

3) Wrong address
Addresses matter because recipient copies are delivered to the address you provide.

4) Wrong totals
Confirm you included only reportable payments and excluded credit card and processor payments.

5) Wrong form (NEC vs MISC)
Contractors generally get 1099-NEC, rent generally goes on 1099-MISC.

6) Duplicate vendors
Make sure you’re not filing two 1099s for the same vendor under slightly different names.

What You Should Have at the End of Step 4

When this step is complete, you should have:

• all vendor information entered correctly
• totals entered correctly
• vendors assigned to the correct form
• forms generated and ready to file
• delivery method selected for vendor copies

Step 5: File and Send Everything on Time (Deadlines, Delivery, and State Requirements)

This is the step where you make it official. You’ve got your vendor list, your W-9s, your totals, and your forms ready to go. Now you just need to do two things:

1. File the forms with the IRS (and possibly the state)
2. Provide copies to your vendors

This is also where timing matters. The IRS is very particular about deadlines, and late filing penalties can add up quickly, especially if you have multiple vendors.

The Two Big Deadlines You Need to Know

Most businesses only need to remember two dates.

1) 1099-NEC deadline
Form 1099-NEC is due to the IRS and must be provided to the contractor by the same deadline.

So for most businesses, this is the “nonemployee compensation must be done first” deadline.

2) 1099-MISC deadline
1099-MISC has different IRS deadlines depending on whether you file paper or electronically. Recipient copies are generally due earlier than paper filings.

Here’s the practical takeaway:
If you want to keep it simple, aim to have all your 1099s done by the same deadline you use for 1099-NEC. That way you’re not juggling multiple due dates.

If you’re filing through a platform like Avalara or Track1099, the system will typically display deadlines clearly and guide you through submission timing.

What “Filing” Actually Means

A lot of business owners think “filing” just means sending the form to the contractor.

It’s two separate steps:

• You file the 1099 with the IRS
• You send the vendor a copy (recipient copy)

You need both. Sending the form to the vendor does not count as filing with the IRS, and filing with the IRS does not automatically mean the vendor has received it.

Most e-file platforms handle both pieces in one workflow, which is why they’re so popular.

How to Send 1099s to Vendors

You have a few options for delivering recipient copies:

Option 1: Mail a printed copy
This is the traditional route. Your filing platform can often mail them for you, which saves time and reduces mistakes.

Option 2: Provide electronic delivery
Many platforms allow e-delivery, but vendors often must consent to receive forms electronically. This is why mailing can sometimes be the easiest and cleanest approach if you don’t already have electronic delivery set up.

Option 3: Deliver manually
You can print and send yourself, but this is where businesses lose time, misplace forms, or accidentally send a form to the wrong address.

If you have more than a handful of 1099s, outsourcing delivery through a filing platform is usually worth it.

Proof of Filing and Proof of Delivery

Keep records. Even if nothing goes wrong, you want to be able to show:

• filing confirmation
• submission date
• what was filed
• recipient delivery status (if available)

If a vendor claims they didn’t receive it, you want to be able to prove it was sent. If the IRS claims it was filed late, you want a timestamp.

Most filing platforms provide confirmation reports you can download. Save them with your year-end records.

State Filing Requirements: The Part People Forget

Some states require 1099 filing in addition to IRS filing. Some states participate in combined federal/state filing programs, and some require direct state filing.

This is one of those areas where the rules vary enough that it’s not worth guessing.

Here’s the practical approach:

• If you file through Avalara or Track1099, check whether they offer state filing support for your state
• If they do, use it
• If not, confirm with your accountant whether your state requires separate submission

If you operate in multiple states, it’s even more important to confirm state-level requirements.

Penalties: What Happens if You File Late or File Incorrectly

Penalties depend on how late you file, and whether the issue was a failure to file, late filing, or incorrect information.

The big thing to know is this:

• penalties are often applied per form
• so if you have 15 vendors and you file late, it’s not just one penalty, it can multiply
• filing incorrect information can also trigger penalties and correction requirements

The best way to avoid this is simple:

• collect W-9s early
• clean your totals
• file before the deadline
• keep proof

What to Do if You Miss the Deadline

First, don’t panic. Missed deadlines happen, especially when business owners realize in January that they should have done this in November.

The solution is not to ignore it. The solution is to file as soon as possible.

If you missed the deadline:

1. file immediately
2. send vendor copies immediately
3. keep documentation showing when you filed
4. consult your accountant if you’re unsure about penalty exposure

The longer you wait, the worse the situation gets.

What if a Vendor Tells You Their Information is Wrong After You File?

This happens a lot. Vendors move, change business names, or suddenly decide they “might have given you the wrong EIN.”

If you discover incorrect information after filing, you may need to file a corrected 1099.

This is why it’s so important to:

• collect W-9s early
• review forms before filing
• confirm that names and tax IDs match exactly

Filing software usually supports corrections, but corrections take time. So do everything you can to avoid them.

Your Quick Step 5 Checklist

Before you hit submit, make sure:

• every vendor has a W-9 on file
• vendor names and tax IDs match the W-9
• totals exclude credit card and payment processor transactions
• forms are classified correctly (1099-NEC vs 1099-MISC)
• delivery method is selected
• filing confirmation will be saved once submitted
• state filing requirements are accounted for

What You Should Have at the End of Step 5

When this step is complete, you should have:

• 1099s filed with the IRS
• recipient copies delivered
• confirmation reports saved
• a clean compliance record for the year

Step 6: Fix Mistakes, Handle Weird Situations, and Clean Up Loose Ends

Even when you do everything “right,” 1099 season still has a way of throwing curveballs. A vendor suddenly updates their business name. Someone realizes they paid a contractor entirely through PayPal after you already included it. A W-9 shows up missing an EIN. Or you discover that your “vendor” was actually two different businesses with the same name.

The goal of this step is to help you handle the most common messes without creating a bigger one.

Mistake #1: You Filed a 1099 With the Wrong Name or Tax ID

This is one of the most common reasons businesses need to file corrections.

What usually happens:

• the vendor gave you the wrong EIN or SSN
• the vendor used the wrong name on their W-9
• your system used a DBA or nickname instead of the legal name
• someone typed a digit wrong in the tax ID

If the name or tax ID is wrong, you generally need to file a corrected 1099.

The best way to handle it:

1. Get an updated W-9 from the vendor
2. Confirm what their legal name and correct TIN should be
3. File a correction through your 1099 platform (Avalara and Track1099 both support corrections)
4. Send the corrected recipient copy to the vendor
5. Save documentation of what changed and why

Do not ignore a mismatch. If you do, you risk IRS notices and penalty exposure later.

Mistake #2: You Reported the Wrong Total Amount

This happens most often when businesses:

• include credit card transactions they should have excluded
• include PayPal/Stripe/Square payments they should have excluded
• fail to include ACH/check payments that should have been included
• lump together goods and services and report too much
• accidentally pull totals from the wrong date range

If you over-reported or under-reported the amount, you may need to file a correction.

Practical approach:

• If the error is minor and you catch it quickly, correct it and move on
• If you are unsure how to correct it, involve your accountant before submitting additional forms

Corrections are manageable, but you don’t want to create a chain reaction of multiple incorrect filings.

Mistake #3: You Accidentally Issued a 1099 to Someone You Did Not Need To

This is common when businesses misunderstand payment processor rules and send 1099s to vendors who were paid by credit card or third-party apps.

If you sent a 1099 to someone who should not have received one:

• do not pretend it didn’t happen
• communicate with the vendor
• correct the filing if needed

Vendors do not love getting an unexpected tax form, especially if it doesn’t match what they reported.

Your filing platform will typically walk you through how to void or correct the form. The specific process depends on the type of error, but it’s fixable.

Mistake #4: You Missed a Vendor Entirely

This can happen if:

• the vendor was paid under a different name
• the vendor was categorized incorrectly in your accounting system
• the vendor was paid through a separate bank account or credit card
• the vendor was added late and fell through the cracks

If you discover you missed a vendor who should have received a 1099:

1. file it as soon as possible
2. send the vendor copy as soon as possible
3. keep documentation showing when it was filed

This may still be considered late, but filing late is almost always better than not filing at all.

Mistake #5: You Do Not Have a W-9 But the Vendor is Clearly 1099-Reportable

This is the scenario that causes business owners the most panic, because you can’t accurately file without the vendor’s TIN.

If you do not have a W-9:

• request it immediately
• document that you requested it
• consider holding payment on future invoices until it is received
• if the vendor continues refusing, consult your accountant about backup withholding requirements

If you end up filing without a TIN, it increases your risk of penalties. In many cases, it is better to push hard for compliance and file correctly rather than rushing a sloppy submission.

Mistake #6: The Vendor Says “I Don’t Think I Need a 1099”

This is a classic one.

A vendor’s opinion does not determine whether you need to file a 1099. The requirement is based on the IRS rules, not the vendor’s preferences.

If a vendor pushes back, keep your response simple:

• it’s a standard tax reporting requirement
• you are required to issue the form based on payment type
• it does not change their taxes directly, it simply reports the income they were paid

If they still argue, your best approach is to require the W-9 and proceed with compliance.

Mistake #7: You Have Duplicate Vendors or Inconsistent Naming

This is more common than people realize, especially if vendor records are created by multiple people or across multiple systems.

Examples:

• “John Smith” and “John Smith Consulting” show up as two vendors
• “ABC Marketing” and “ABC Marketing LLC” show up as two vendors
• a vendor is paid under one name but W-9 lists another

If you see duplicates:

• combine totals correctly
• confirm the legal name and tax ID from the W-9
• file one clean 1099 under the correct entity

This is also why you want to clean your vendor list in Step 3 before you import data into your filing platform.

The “Weird Situation” Bucket: Common Edge Cases That Trip People Up

These are the situations that tend to cause the most confusion:

Mixed payment methods
If you paid a vendor partly by ACH and partly by PayPal, you generally include only the ACH portion and exclude the PayPal portion.

Goods plus services
If a vendor invoice includes both physical goods and service labor, you may need to separate the service portion. If the invoice is bundled, consult your accountant before guessing.

Vendors paid through bill pay services
Some bill pay services are considered third-party settlement networks and may shift reporting responsibility. If you’re not sure how your bill pay platform processes payments, confirm before including those payments on a 1099.

Multiple entities under one “brand name”
Sometimes you work with a vendor brand that has multiple legal entities underneath it. Always file based on the legal name and tax ID from the W-9.

How to Communicate Corrections to Vendors

If you file a correction, your vendors need to know. Keep it short and professional.

“Hi [Vendor],
We discovered that your 1099 needed a correction due to [incorrect amount / incorrect tax ID / etc.]. A corrected copy has been issued. Please use the corrected form for your tax reporting. Thank you.”

You don’t need to overexplain, but you do want clarity so the vendor doesn’t accidentally use the wrong version.

What You Should Do After Filing to Make Next Year Easier

Once 1099 season is finished, the smartest thing you can do is take 30 minutes to prevent the same chaos next year.

Here are the best post-1099 cleanup tasks:

• update your vendor list and deactivate duplicates
• mark vendors as 1099-eligible or not
• standardize vendor naming conventions
• collect missing W-9s immediately (do not wait until next year)
• build a vendor onboarding checklist that includes W-9 collection
• confirm whether your payment platforms create 1099 reporting issues

This is how you turn 1099 season from “annual crisis” into a routine process.

What You Should Have at the End of Step 6

By the end of this step, you should have:

• corrected any mistakes
• documented your filing and delivery confirmations
• handled missing vendor information
• created a plan to make next year easier

Wrap-Up: Your Quick 1099 Game Plan (and How to Make It Easy Next Year)

If you made it this far, you’ve already done something most business owners don’t: you approached 1099s with a plan instead of panic.

And that’s the entire point of this guide. The 1099 process isn’t complicated because it’s hard. It’s complicated because people wait too long, skip key steps, and try to wing it when deadlines are looming.

If you follow a repeatable process, 1099 filing becomes a routine compliance task. Slightly annoying, yes. But manageable, predictable, and very doable.

The Down and Dirty 1099 Process (Start to Finish)

Here’s the full process in one clean checklist. If you want to file on time without losing your mind, this is the workflow you follow every year.

Step 1: Identify who needs a 1099

• Focus on vendors you paid for services
• Confirm they meet the $600 threshold
• Exclude vendors paid by credit card and third-party processors
• Don’t assume LLC status tells you anything
• Remember exceptions (attorneys, certain medical payments, rent, etc.)

Step 2: Collect W-9s early

• Request W-9s before you pay vendors for the first time
• Store them securely
• Confirm they’re complete (name, classification, tax ID, signature)
• Make it part of onboarding, not an afterthought

Step 3: Pull vendor totals and separate what counts

• Pull vendor totals for the full year
• Separate reportable payments (cash/check/ACH/wire) from non-reportable (credit card/processors)
• Combine duplicate vendor records
• Confirm totals match your books

Step 4: Fill out the right forms

• Use 1099-NEC for most service providers and contractors
• Use 1099-MISC for rent and certain other categories
• Enter vendor info exactly as it appears on the W-9
• If you’re filing multiple forms, import in bulk to reduce errors
• Use a filing platform like Avalara or Track1099 to simplify the process

Step 5: File and deliver on time

• File with the IRS and send vendor copies by the deadline
• Keep proof of filing and delivery
• Confirm whether state filing requirements apply
• File early enough that you’re not relying on perfect timing

Step 6: Fix mistakes quickly if needed

• Correct wrong names, TINs, totals, or missed vendors
• Don’t ignore mismatch issues
• Document corrections and communicate with vendors clearly
• Use what you learn to clean up your process for next year

That’s it. That’s the whole system.

The Most Common 1099 Mistakes (Quick Recap)

If you want to avoid the problems that cause corrections, penalties, and vendor frustration, pay attention to these:

• Waiting until January to collect W-9s
• Issuing 1099s to vendors paid entirely by credit card or platforms like PayPal, Stripe, or Square
• Assuming “LLC” means no 1099
• Using the wrong form (NEC vs MISC)
• Sending a 1099 with the wrong legal name or tax ID
• Forgetting rent payments or attorney payments that require special attention
• Having duplicate vendors in your accounting system and splitting totals incorrectly
• Filing late and letting penalties stack up per form

If any of those sound familiar, you are not alone. They’re the greatest hits of 1099 season.

Make Next Year Easier: The One Thing That Changes Everything

If you do nothing else, do this:

Build W-9 collection into vendor onboarding.

That one change eliminates the worst part of 1099 season. Because when you already have tax IDs on file, the year-end process becomes simple:

• pull totals
• separate payment methods
• file and deliver

That’s how you turn this into a predictable task instead of a last-minute crisis.

Want this handled for you?

If you’re reading this and thinking, “This is helpful… but I do not want to do this,” that’s completely fair.

1099s are one of those tasks that are easy to mess up and annoying to manage, especially if you have multiple contractors and vendor types.

We’ll do them for you. Reach out now so we can:

• clean up your vendor list
• collect missing W-9s
• confirm totals and payment methods
• file everything correctly
• keep you compliant and stress-free

Because the only thing worse than filing 1099s is filing them late, filing them wrong, or dealing with corrections after the fact.

If you want to get this off your plate, reach out now and we’ll take it from here.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. Consult with a qualified professional for personalized guidance tailored to your specific needs and situation. Feel free to reach out to The Numbers Agency for a free consultation to see how we can help!