1099 Filing Requirements for Business Owners: What You Need to Know
Understanding who needs a 1099, which form to use, and when the forms are due can help your business avoid unnecessary penalties and stay organized during tax season. If your business made payments to independent contractors, vendors, attorneys, landlords, or other service providers during the year, you may have a 1099 filing requirement. The IRS requires businesses to report certain payments made in the course of their trade or business. For payments made after December 31, 2025, the reporting threshold for many payments reported on Forms 1099-NEC and 1099-MISC increased from $600 to $2,000. Click here for more information about what services require a 1099.
Who Needs to File a 1099?
If you are engaged in a trade or business and made certain payments during the calendar year, you may be required to file an information return with the IRS and provide a copy to the recipient. Common reportable payments include:
- Nonemployee compensation: Payments of $2,000 or more to someone who is not your employee for services performed for your business, generally reported on Form 1099-NEC.
- Rent: Certain rent payments of $2,000 or more, generally reported on Form 1099-MISC
- Prizes and awards: Certain payments of $2,000 or more that are not for services, generally reported on Form 1099-MISC.
- Payments to attorneys: Certain payments to attorneys may be reportable regardless of whether the attorney is incorporated.
- Other reportable payments: Depending on the type of payment, other information reporting requirements may apply.
What happens if I don’t file a 1099?
Failure to file a 1099 will result in penalties imposed by the IRS. The penalties range from $60 to $680 per 1099, plus a potential late penalty depending on how late you file (for example, if you had 10 contractors who should have received a 1099, that could be $5,800 in penalties). The IRS may also impose an accuracy-related penalty that’s equal to 20% of your underpayment. As you can see, these penalties could significantly impact your business.
How does it work?
Need help filing your 1099s? Our Business Services team can take care of this for you. Here’s how it works…
1) Prior to December 31, gather and confirm the information needed to complete the forms (recipient’s name, tax identification number, street address, email address, and amount paid)
2) Complete the Storen Financial 1099 Request Form. If we processed the 1099s for your business last year, we will be sending you a summary list in late December for you to update and approve.
3) Upload the completed form to your Storen Financial client portal. (Click here to access the client portal.) Don’t have a portal, contact us and we’ll set you up! (Click here for contact info.)
4) We will then mail the completed 1099s to each contractor/recipient and provide you with a summary copy of all 1099s sent.
(Click here for 1099 preparation pricing information.)
(Click here to view or download the 1099 request form.)
Please contact our Business Services team if you have any questions or need additional information.
Don’t Wait Until January
1099 filing doesn’t have to be a last-minute task. Reviewing your vendor information and payments before the end of the year can help identify potential reporting requirements early and give you time to correct missing information. If you’re unsure whether a payment requires a 1099, which form to use, or what information you need to provide, our Business Services team can help. These aren’t questions you have to answer on your own. Our team helps you understand the options, weigh the pros and cons, and create a strategy that aligns with your goals—not just for this year, but for years to come.
Interested in a consultation? Contact us now and schedule one today. (Click here to contact us.)
Ask us about our Business Advisory Services program, which delves into complex topics affecting your business’s health and operations. This program offers a comprehensive, forward-thinking approach focused on achieving maximum profitability. (Click here to learn more about Business Advisory Services.)
Blog by Penny Snyder – Senior Business Accountant
Learn more about Penny and the rest of the Storen Financial team here.