Almost every 1099 problem traces back to a missing W-9. A vendor did work in March, invoiced, got paid, and nobody asked for a tax ID. Now it's January, nobody is returning your messages, and you're deciding between filing with incomplete information or not filing at all. Both options have a cost.
Baum's Accounting Services flips the order. The W-9 gets requested before the first payment clears, the vendor record in QuickBooks or Sage gets flagged as reportable right then, and by December the list is already built. For construction clients around Lexington that can mean dozens of subs across a season, which is exactly the volume where a January scramble turns into missed forms. The 1099-NEC and 1099-MISC both get prepared, delivered, and transmitted from the same clean data.
The work is mostly data hygiene and only a little bit of form-filling. Which vendors were paid by check or ACH rather than card, since card payments get reported by the processor and duplicating them creates its own mess. Which ones are incorporated, since most corporations are excluded and attorneys are not. Which payments were for services versus materials, because a subcontractor invoice covering both needs splitting. We work through the vendor ledger, match it against W-9s on file, and produce a reportable list that survives review instead of one built from a bank download.
Issuing a 1099 does not make someone a contractor. That determination rests on how the work actually happens, and the agencies look at behavior over paperwork. A person who works your hours, uses your tools, takes direction from your supervisor, and has no other clients is going to look like an employee no matter what the agreement says. Getting it wrong reaches further than the form, into unemployment tax, workers' comp premium, and back withholding. We flag the relationships that look risky before the forms go out, because January is a bad time to discover the question.
There's a rule for this, and most businesses don't use it. If a vendor won't provide a taxpayer identification number, you're supposed to withhold a portion of what you pay them and remit it. Nobody enjoys that conversation, which is precisely why it works: the W-9 tends to appear once the request is made in writing. The alternative is filing a form with a blank or wrong TIN, collecting a notice, and being on the hook. Book a consultation and We will set the request process up so this isn't a January scramble.
Generally, unincorporated vendors paid above the reporting threshold for services during the year, plus rent paid to a landlord and any payment to an attorney regardless of entity type. Payments made by credit card or through a third-party platform are excluded because the processor reports them. The vendor ledger answers most of it once the W-9s are on file.
Nonemployee compensation goes on the NEC. That's the subcontractor who framed the building or the consultant who ran your systems project. The MISC covers other categories, including rent, prizes, and certain legal payments. Same vendor can receive both in a year if you paid them for services and also rented space from them. Sorting that correctly is part of the prep.
File them. A late filing is generally treated better than a form that was never filed at all, and an unfiled form doesn't resolve itself over time. The bigger risk is a pattern, since a business that skipped a whole category of vendors looks different from one that missed a single form. Bring the prior year detail to a consultation.
Other work in this area that tends to come up in the same conversation.
Hours, salaries, deductions, and reimbursements processed each pay period, then posted to the ledger so wage expense is right the first time.
Read moreFederal and state withholding deposited on your required schedule, with quarterly and annual returns prepared and submitted when they're due.
Read moreKentucky unemployment reports prepared each quarter, wage bases tracked correctly, and rate changes applied when the state issues a new one.
Read moreBook a consultation and we will look at where things stand today and what it would take to fix them.
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