Yes, if you paid a subcontractor $600 or more during the calendar year for services. The form you need is the 1099-NEC, which replaced the 1099-MISC for reporting contractor payments starting in 2020.

The $600 threshold applies to payments made by cash, check, ACH transfer, or wire. Payments made through credit card, debit card, or payment platforms like PayPal and Venmo are reported by the payment processor on a 1099-K instead. You don’t issue a 1099-NEC for those transactions.

You generally don’t need to issue 1099s to corporations. If a subcontractor is a C-corp or S-corp, they’re exempt. The exception is payments to attorneys, which require a 1099 regardless of corporate status. The W-9 form tells you the entity type, which is why collecting it before making any payment matters so much.

The deadline is January 31. Both the contractor’s copy and the IRS filing are due on the same date. Miss this deadline and you’re looking at penalties that range from $60 to $330 per form depending on how late you file.

Collect the W-9 before you make the first payment. Make this non-negotiable. It takes thirty seconds to request and saves hours of frustration later. If a sub won’t provide a W-9, that’s a red flag about how they run their business. You need each sub’s legal name, business name, address, and tax ID number. Chasing this information down in late January while everyone is busy with their own tax prep is miserable.

Track payments by vendor throughout the year in your accounting software. QuickBooks and most bookkeeping systems can generate 1099 reports if vendors are set up correctly and marked as 1099-eligible. Trying to reconstruct a year’s worth of payments from bank statements in January is error-prone and time-consuming.

For contractors in MetroWest running multiple jobs with multiple subs, this adds up fast. A remodeler might use fifteen different subs in a year. Each one needs a W-9 on file, payments tracked, and a 1099 issued if they hit the threshold. Miss a few and you could be looking at $1,000 or more in penalties for what amounts to paperwork errors.

Your accountant needs clean 1099 data to prepare your business tax return. Deductions for subcontractor payments require proper documentation. If you claim $80,000 in sub costs but only issued $50,000 in 1099s, that gap raises questions during an audit.

If tracking W-9s and subcontractor payments throughout the year sounds tedious, it is. It’s also exactly the kind of work that local bookkeepers handle as part of regular monthly bookkeeping. Getting it right during the year means January is just running a report, not a scramble.