Payroll

1099-NEC and 1099-MISC Filing Checklist for Small Businesses

Who to send 1099s to, what the dollar thresholds are, when they're due, and how to avoid IRS penalties for late or wrong filings.

By Aparna Devalla, CPA3 min · 5 slidesUpdated May 4, 2026

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1099-NEC: any non-employee (contractor, freelancer, professional) you paid $600+ during the year for services in the course of your trade or business.
1099-MISC: rent ($600+), prizes/awards ($600+), gross proceeds to attorneys ($600+), royalties ($10+), medical and healthcare payments ($600+), and a few other categories.
Payments to corporations are generally exempt — EXCEPT payments to attorneys (always 1099-NEC) and payments for medical or healthcare services (always 1099-MISC).
LLCs: depends on tax election. If they're a disregarded entity or partnership, they need 1099s. If they elected S-corp or C-corp, they're treated as corporations and are exempt (except attorneys/medical).
Form W-9: get one from every contractor BEFORE you pay them. It confirms entity type and TIN.

Payments to W-2 employees — those are on W-2 / W-3 instead.
Payments for goods, materials, or merchandise — only services count for 1099-NEC.
Payments via credit card or third-party payment networks (Stripe, PayPal, Venmo business) — the platform issues a 1099-K instead.
Personal-use payments — if you hire a contractor to paint your house, you don't issue a 1099 (it's not in your trade or business).
Reimbursements to contractors for documented expenses (under an accountable plan) — only the service fee portion is reported.

1099-NEC: due to recipients AND to the IRS by January 31. No 30-day extension grace period.
1099-MISC: due to recipients by January 31; due to the IRS by February 28 (paper) or March 31 (e-file).
E-filing is mandatory if you file 10+ aggregate information returns (W-2s + 1099s + others) — the threshold dropped from 250 in 2024.
Use IRIS (Information Returns Intake System) or a third-party service like Tax1099, Track1099, or your payroll provider.
Form 1096 (paper transmittal) is no longer used if you e-file.

Pull a year-end vendor expense report from QuickBooks or Xero, filtered for contractor and professional fees.
Cross-reference against your W-9 file — any contractor you don't have a W-9 for, request immediately.
Exclude payments made via credit card or third-party networks (those generate 1099-Ks).
Confirm entity type from W-9: skip corporations (except attorneys and medical providers).
Generate 1099-NECs by January 25, deliver to contractors by January 31, e-file by January 31.
Need help? Rubric Financial includes 1099 preparation in every bookkeeping engagement.

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Educational content — not tax, legal, or accounting advice. Confirm with a CPA before acting.

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