How to Handle 1099s Without Losing Your Mind
1099s don’t have to be a tax season nightmare—but only if you know who actually needs one and how to file them correctly. The last thing you want is to miss a deadline, overpay taxes, or accidentally trigger an audit.
In this episode, we’re breaking down:
✔️ Who really needs a 1099 (and who doesn’t)
✔️ The difference between a 1099-NEC and a 1099-MISC
✔️ Common mistakes that lead to IRS penalties
✔️ What payment methods do and don’t require a 1099
✔️ How to stay organized so you’re not scrambling in January
To make things even easier, I’m giving you a free 1099 decision tree—no strings attached! This tool will help you confidently determine who needs a 1099 every tax season.
🎧 Hit play now and get ahead of your 1099 filings before tax time sneaks up on you!
Resources & Links
Website: https://www.firestormfinance.com/
Instagram: https://www.instagram.com/firestormfinance/
Threads: https://www.threads.net/@firestormfinance?hl=en
LinkedIn: https://www.linkedin.com/in/samantha-e-8796b6176/
Newsletter: https://firestormfinance.myflodesk.com/podcastnewsletter
1099 Decision Tree: https://www.canva.com/design/DAGdgjX_nR0/ymLV35UTG6TJfDrHQyTZgw/view?utm_content=DAGdgjX_nR0&utm_campaign=designshare&utm_medium=link2&utm_source=uniquelinks&utlId=hf2b858c341
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Transcript
Welcome to CreativeMind Smart Money, the podcast where
Speaker:creativity and business smarts collide.
Speaker:I'm your host, Samantha Eck, bookkeeper, business coach, and
Speaker:your go to guide for building the creative business of your dreams.
Speaker:Whether it's mastering your money, streamlining your systems, or growing
Speaker:your business, I'm here to share insights that empower you to thrive.
Speaker:Plus, I'll be bringing in industry experts to dive into all aspects
Speaker:of entrepreneurship, so you can turn your passion into profit
Speaker:without losing your creative spark.
Speaker:Let's get started
Speaker:You are listening to the Creative Minds Smart Money Podcast, and on
Speaker:today's episode, we're covering a much needed topic, 1099's.
Speaker:This is an episode you're gonna wanna keep in the back of your pocket for when next
Speaker:year rolls around, because January is.
Speaker:Always counts when it comes to 1099's and nobody can ever
Speaker:figure out who they're owed to.
Speaker:So today I am gonna give you the facts as straight as possible, as well as a
Speaker:completely free resource with no strings attached, that you can utilize next
Speaker:year to file your 1099's with ease.
Speaker:So first of all.
Speaker:1099s are necessity for any business owner who uses any type
Speaker:of service provider, contractor.
Speaker:You rent space, you pay royalties.
Speaker:There's so many different aspects to it that.
Speaker:We just kind of have to go over all of them today.
Speaker:So according to the IRS businesses need to file a 1099-NEC, so it's NEC
Speaker:for each person to whom you have paid at least $600 in services performed
Speaker:by someone who's not your employee.
Speaker:So if you hire me.
Speaker:If you hire a social media manager that is someone who's been paid $600.
Speaker:Now there are exceptions to that and I will get to it, so, but let's kind
Speaker:of just talk about who we need to pay and payments to an attorney, cash
Speaker:payments for fish, things like that.
Speaker:But.
Speaker:Very specifically, you do not owe 1099 to people you pay product like
Speaker:you spend and buy products from.
Speaker:So if you buy it from someone on faire, you buy from a local
Speaker:vendor, something like that.
Speaker:You do not owe them a 1099.
Speaker:It is only for those who do services.
Speaker:And this is specifically because the IRS wants to see what people are being paid.
Speaker:And that sounds a little bit scary.
Speaker:There is another 1099 you need to be aware of.
Speaker:It is called the 1099 MISC. It is required for each person
Speaker:that you've paid throughout the year, at least $10 in royalties.
Speaker:And royalties will include things like if you are a bookish goods
Speaker:vendor and you sell Sarah J Maas products, that is a royalty product.
Speaker:So if you pay her.
Speaker:Publishing company royalties.
Speaker:Technically you would need to send them a 1099.
Speaker:It also pertains to rents any prizes, other income bartering like we had
Speaker:talked about, things like that.
Speaker:Those are also on a 1099 MISC. There are very common misconceptions
Speaker:about who needs to file a 1099.
Speaker:So I wanna be as plain and simple for you in this moment right now.
Speaker:like I mentioned, I will be giving you a free resource that
Speaker:you can utilize year after year.
Speaker:Obviously, rules are changing and I'll try and keep it up to date, but.
Speaker:The first thing you need to ask yourself when you're thinking of
Speaker:any service provider and who you need to pay is, did you pay them
Speaker:$600 or more during the tax year?
Speaker:So for example, me, my packages start at $500.
Speaker:So if we work together for at least two months, you're
Speaker:already going to owe me a 1099.
Speaker:But the next question you need to ask yourself is how you pay them,
Speaker:because depending on certain rules.
Speaker:You might not be owing them a 1099.
Speaker:It might be their payment processor.
Speaker:It might be someone else that owes them a 1099.
Speaker:So you have to kind of watch out for that.
Speaker:So this is where the misconception comes in, where everybody claims
Speaker:that they just need to send a 1099 to anybody they've worked with that
Speaker:has services, but it's just not true.
Speaker:So who needs to file a 1099?
Speaker:Of course, again, it is.
Speaker:Anybody that is working with a service provider, that they pay them over $600.
Speaker:So common mistakes that I see and ways to make this whole
Speaker:process easier, first of all.
Speaker:You need to get a W9 from every service provider regardless of
Speaker:their classification, their business classification, regardless of
Speaker:how you pay them, just to make sure you have your butt covered.
Speaker:Essentially, this W9 is going to be on your records for your bookkeeper
Speaker:or whoever to know how to file them.
Speaker:Now if you are like, okay, I don't want to send it because this person always
Speaker:sends me 1099, even though they don't have to, I understand your situation.
Speaker:Please explain that to the person you're working with or to their CPA or
Speaker:whatever, just to make them understand.
Speaker:But if at all possible, always send a W9 or always get a W9
Speaker:before any payments are made.
Speaker:This is so important because if, for example you pay someone $600,
Speaker:they do require a 1099 and you don't have their W9, you could be at risk
Speaker:for paying whatever taxes they owe.
Speaker:So it's so, so, so important.
Speaker:I. The second thing is incorrect information.
Speaker:So whether they have an incorrect EIN or tax identification number, or
Speaker:they have an incorrect address, you need to always check in on that and
Speaker:make sure that those are correct.
Speaker:A lot of places will help you e-file nowadays, so it's just
Speaker:really easy to get these done.
Speaker:It's just a matter of making sure you have your information correct and then.
Speaker:Of course, everyone does assume that every third party handles 1099's,
Speaker:but not every third party does.
Speaker:So before we get into all of the like nitty gritty of.
Speaker:Who needs to pay, whether or not we wanna ask ourselves when and how do we file.
Speaker:So as of January 1st, every year your 1099's should be open.
Speaker:They don't open for e-file, I believe, until like halfway through the month.
Speaker:So if you wanna e-file them, you kind of have to wait, but you can
Speaker:already get them prepped and in the system to e-file the day it opens.
Speaker:Better early than never, I would say in this case.
Speaker:As of the first, you should have everything that you need to file.
Speaker:Get all of your information upfront.
Speaker:Make sure you have everything that you need to file.
Speaker:Go to a website, whether that's QuickBooks Track 1099.
Speaker:Tax 1099, and if this is too overwhelming for you, feel like, I don't know
Speaker:who needs a 1099, I can't handle it.
Speaker:That's exactly what your bookkeeper or your CPA is there for.
Speaker:A lot of people do love to file their 1099's themselves, and some people
Speaker:actually miss 1099's for certain people, but it's completely up to
Speaker:you who, and why you wanna do that.
Speaker:Once you file, they will send either a mail out notification to whoever
Speaker:you owe to, or they will send.
Speaker:An e-file email and then they'll also e-file on be on your behalf to the IRS.
Speaker:So there's really not a lot that you have to do, but you need to
Speaker:have all the information upfront.
Speaker:Sometimes it can be a little bit difficult to like figure out where things go,
Speaker:which is why working with a bookkeeper or working with someone else who knows kind
Speaker:of what those forms look like can help.
Speaker:But sometimes they can get a little bit complicated.
Speaker:1099's are due by January 31st.
Speaker:I believe the exception is miscellaneous ones.
Speaker:I think miscellaneous ones are due by the our March because I
Speaker:think rent ones are different.
Speaker:I'm not a hundred percent sure on that.
Speaker:Don't quote me.
Speaker:1099's themselves, I would always just file them by January 31st
Speaker:entirely, because that is what I've known and always been told, is the
Speaker:deadline, if you don't file by the 31st, you can actually get penalized.
Speaker:So for one thing, if you file your taxes and you.
Speaker:Say that you had to pay services, but you didn't send out 1099's,
Speaker:they will penalize you, and you can pay large amounts of fees.
Speaker:Everybody's like, oh, no, they're not, they're not that
Speaker:bad that you can pay fees.
Speaker:They may audit you because they may not understand, and if you don't have
Speaker:correct information, or you don't have SSNs or EINs or TIN numbers.
Speaker:They can actually, like I said, send you a notice and then charge you for
Speaker:the taxes that are owed by this person.
Speaker:So you wanna make sure that you are all up to date there.
Speaker:now that we've kind of gone over all of the nitty gritty, I really wanna
Speaker:talk about who needs a 1099 and why.
Speaker:And like I said, I'm giving you guys a free resource.
Speaker:I have a 1099 decision tree that I came up with in Canva that is completely free.
Speaker:I will post it in the show notes.
Speaker:You can hold onto it for next year so that you can take a look at this.
Speaker:Again, like I said, I will look at the new rules next year and try and update this.
Speaker:So again, we wanna ask ourselves if we paid them $600.
Speaker:During the tax year, so first of all, compile a list of
Speaker:people you've paid for services.
Speaker:This includes social media managers.
Speaker:This includes people who have painted your house.
Speaker:That is a service.
Speaker:It is not a product that includes people like plumbers,
Speaker:that includes all those people.
Speaker:Compile that list of people who you've paid $600 or more during the tax year.
Speaker:You should start doing this in November of the year prior, so this year, in
Speaker:2025, as of November, compile that list of people you've paid $600 or more
Speaker:to during the tax year that have done a service, start getting their W9s.
Speaker:If you don't already have them and getting their information, you're ready.
Speaker:Come January, because if you wait until January, I will tell you right now,
Speaker:there are so many people that are doing.
Speaker:Everything else that you probably won't get their W9 in time.
Speaker:So bug them until you get their W9 and then you can go ahead and do that.
Speaker:Now the next question you need to ask yourself is how much did you pay them?
Speaker:So how much did you pay them?
Speaker:You have four different ways usually that you pay someone.
Speaker:So you have credit cards and debit cards.
Speaker:First of all, if they pay through a credit or debit card, and this is like a direct
Speaker:payment through a credit or debit card.
Speaker:This is not through a payment processor.
Speaker:This is not through any sort of other thing.
Speaker:This is a direct payment into your bank with a credit or debit card.
Speaker:So it could be like a Chase payment processor, it could
Speaker:be something like that.
Speaker:If they pay you directly with a CH credit card or debit
Speaker:card, there's no 1099 needed.
Speaker:Whoever the credit card company is, whether that's Amex or
Speaker:Capital One or whatever, will.
Speaker:Owe them a 1099 K. So you do not need to send them a 1099 if you send
Speaker:them a 1099 when it is not needed.
Speaker:I just want you to be aware of what's going on.
Speaker:If you send someone a 1099 and it's not needed, they now have to double
Speaker:report income because whatever 1099 you receive, you have to report.
Speaker:If you don't report it on your taxes, the IRS could.
Speaker:Flag you for an audit.
Speaker:You're much more likely to get flagged for an audit actually, because they've already
Speaker:received that document saying that you earned that income and you not recording
Speaker:that on your taxes to them is like, , why are you trying to hide income from us?
Speaker:So if you do not owe someone a 1099, do not send it.
Speaker:And if you are unsure, make sure you get the actual feedback
Speaker:you need before you send them.
Speaker:I will be honest, 110% honest with you, I got to this year that I did not need and.
Speaker:It can, it can hurt someone because they will owe more taxes than they need to.
Speaker:So the next thing you also wanna think about is payment platforms.
Speaker:So if they paid you through Stripe, they paid you through
Speaker:Square, they paid you through.
Speaker:HoneyBook, they paid you through Dubsado, whatever those payment platforms are.
Speaker:So if you're going through someone's payment platform, like my clients
Speaker:all go through a payment platform, you do not owe them a 1099.
Speaker:The payment platform company, again will send them a 1099 K
Speaker:that records their entire income.
Speaker:So you don't need to send them one.
Speaker:And that's only with goods and services because PayPal
Speaker:will cover goods and services.
Speaker:But that's what we're gonna talk about next.
Speaker:The other side of that is payment platforms, which is why specifically
Speaker:many bookkeepers and CPAs tell you not to use these is Venmo,
Speaker:PayPal, cash app, things like that, that you pay friends and family.
Speaker:You will need to send a 1099 for those.
Speaker:And then of course if anybody pays you directly through bank transfer, ACH,
Speaker:Zelle or cash, you will owe them a 1099.
Speaker:Zelle is a payment processor, but they take no responsibility.
Speaker:They're literally just a connector between banks, so they don't actually send 1099
Speaker:Ks and they aren't responsible for that.
Speaker:If you send them a bank transfer in ACH for example, you know, I use, I send my
Speaker:parents money sometimes, or my parents send me money sometimes through Zelle
Speaker:and they, it, it was business money that would be a, that would need a 1099.
Speaker:So those are your four key key categories.
Speaker:If you guys are like, Hey Samantha, you missed one, please let me know
Speaker:because I will 110% be happy to tell you if it does need a 1099 or not.
Speaker:And add it to the decision tree for you.
Speaker:Now, if you have gone through that list and you're like, Hey, they've paid me
Speaker:via Venmo, friends and family, or they've paid me via Cash Bank transfer, a CHZ,
Speaker:check, whatever it is, and they need a 1099, you're like, yes, they need a 1099.
Speaker:They paid me $600.
Speaker:They paid me this way.
Speaker:They need one.
Speaker:The next question you need to ask yourself is what type of business they are.
Speaker:So there are two types of business that do not require you to send a
Speaker:1099 unless they are a law firm.
Speaker:So a C Corp or a corporation or an S corp, which means someone who's
Speaker:an LLC tax as an S corp because it is an election and S Corp is
Speaker:technically not like a separate entity.
Speaker:They're an LLC that is taxed as an S corp. They do not need
Speaker:1099 unless they are a law firm.
Speaker:So if they are a law firm, you still need to send 'em a 10.
Speaker:And regardless if they're an S corp, I don't know the rules around that, but
Speaker:I know that law lawyers definitely need that more than, other people probably
Speaker:for an accountability factor as well.
Speaker:I. However, if they are sole prop or single member LLC, which most
Speaker:of the people in our industry is, then they need a 1099 again.
Speaker:But that's only if they pay you directly because there's so many different payment
Speaker:processors nowadays, especially with things like Thrive Cart, which go through
Speaker:Stripe, ada, which goes through Stripe.
Speaker:Any of those things that go through Stripe are already gonna send you one.
Speaker:Now the last question of course, again, I wanna just go over this, you wanna ask
Speaker:yourself is what did you pay them for?
Speaker:Services or products or goods?
Speaker:So technically you could just get a list of people you paid $600 to, but
Speaker:if you wanna start off just getting a really easy list, you would just
Speaker:do services and then go from there.
Speaker:It is very important that you remember these rules because a lot of times
Speaker:people either leave out the 1099's, they actually need to send or send 1099's.
Speaker:They don't even need to send, and of course, sending 1099's costs you money.
Speaker:You really just want to be mindful and think about who you actually
Speaker:owe 1099's to and who you don't.
Speaker:Of course, again, staying on top of this will protect your business.
Speaker:It'll prevent the IRS from coming after you, and it just helps you to
Speaker:stay a little bit more organized.
Speaker:Like I said, the best thing you can do today is to start getting
Speaker:organized as early as possible.
Speaker:If you're looking through your books and you see that you have
Speaker:people that are missing W9s.
Speaker:Reach out to them as early as possible, get those W9s so that by the end
Speaker:of the year you're not panicking.
Speaker:I know I said November, but the earlier you start, the better.
Speaker:And if you wanna implement that in your onboarding process and say, here's my W9.
Speaker:Or if you're working with a provider, say, Hey, can you
Speaker:give a W9 before you pay them?
Speaker:That would be the best thing for you.
Speaker:If you enjoyed this episode, remember to follow us on whatever
Speaker:platform you're listening on.
Speaker:Leave a review and share with a friend who might find this information valuable.
Speaker:Remember that 1099's are an essential part of business, but
Speaker:they don't have to be scary as long as you have all of your facts.
Speaker:As always, I wish you a fantastic week and we'll see you next week.
Speaker:Farewell fellow travelers.
