Every January, a lot of small business owners spend a stressful week tracking down contractors. They need a mailing address, a Social Security number or EIN, and the correct legal name, and the person they paid back in March isn't answering texts.
That scramble is avoidable. The information you need to file 1099s comes from Form W-9, and the best time to collect W-9s is before you need them. November is a great time to catch up.
What Form 1099-NEC Is For
If your business pays an independent contractor for services, you may need to report those payments to the IRS and to the contractor on Form 1099-NEC. NEC stands for nonemployee compensation.
Common examples include payments to a freelance designer, a cleaning service run by an individual, a handyman, a bookkeeper or consultant who isn't on your payroll, or a subcontractor on a job.
Employees don't get a 1099. Their wages are reported on a W-2.
The Threshold Changed for 2026
For payments made in 2026, the reporting threshold for Form 1099-NEC is $2,000. For many years it was $600, so this is a real change. It applies to payments made in 2026 and later, which means the 1099s you file in early 2027.
A few things to keep in mind:
The $2,000 is the total you paid that person or business for services during the year, not the size of a single payment.
Payments to corporations are generally exempt from 1099-NEC reporting. One important exception: payments for legal services are still reportable, even when the attorney's firm is a corporation.
Payments you made by credit card, debit card or a payment app like PayPal for goods and services are generally reported by the payment company on Form 1099-K instead, so they don't go on your 1099-NEC.
That last point is one reason it helps to know how you paid each contractor. Your bookkeeping should make that easy to see.
The 2027 Due Date
Form 1099-NEC normally has to be sent to the contractor and filed with the IRS by January 31. In 2027, January 31 falls on a Sunday, so the deadline moves to Monday, February 1, 2027.
That's earlier than many people expect, and it lands right in the busiest part of tax season. Waiting until late January to start gathering information doesn't leave much room for problems.
Why a W-9 Should Come Before the First Payment
Form W-9 is how a contractor gives you their legal name, business entity type, address and taxpayer identification number. You keep it in your records. You don't send it to the IRS.
The easiest habit to build is simple: no W-9, no first payment. When a new contractor sends you an invoice, ask for the W-9 at the same time. People are much more responsive while they're waiting to get paid than they are ten months later.
There's another reason it matters. If a contractor doesn't give you their taxpayer identification number, the IRS rules say their payments may be subject to backup withholding, which means you'd have to withhold tax from what you pay them and send it to the IRS. Having a W-9 on file from the start avoids that situation entirely.
What to Do This Month
You can get ahead of 1099 season with a few steps:
Make a list of everyone you've paid for services this year. Run a vendor report in your bookkeeping software for January 1 through today, or scan your Profit and Loss detail for contract labor, professional fees and repairs.
Check which ones are likely to reach $2,000 by December 31. Include anyone you expect to keep paying through the end of the year.
Note how you paid them. Check, ACH and cash payments are the ones to focus on. Card and payment app payments are generally handled on Form 1099-K.
Request W-9s from anyone you don't have one for. Send a short, friendly email now while there's no deadline pressure.
Save them somewhere you can find them. A folder in your cloud storage named by year works well. If you use QuickBooks Online, you can also attach the W-9 to the vendor record and mark the vendor as eligible for 1099 tracking.
Clean Books Make 1099s Easy
1099 season is much smoother when your bookkeeping is current. If contractor payments are categorized correctly and your vendor list is clean, preparing 1099s is mostly a matter of running a report and checking it.
If your books are behind, it turns into a hunt through bank statements, trying to remember who each payment went to and why.
If you're not sure your records are in good enough shape to file accurate 1099s, my Diagnostic Review will tell you exactly where things stand. And if you'd like help with 1099 preparation this year, book a free consultation and we'll talk through what you need.
This post is general information, not tax advice for your specific situation. The IRS Instructions for Forms 1099-MISC and 1099-NEC have the full rules.
