Halloween costumes, 1099s, and a NC Senate announcement!
November is historically when we start reminding our clients to take inventory of their contractors tax documents. Because of that bill that passed on 7/3, this will be the last year of the low $600 threshold for filling 1099s, meaning next year you will likely have substantially less work to do for this task. From now until forever, we’ll be here to support you with handholding newsletters like this one, walking you through the 1099 process, but first:
Housekeeping
No deadlines in November! Instead, this is a GREAT time to schedule (and pay for) an hour of your tax pro’s time, so they can make recommendations on optimizing your tax situation based on the first 3 quarters of the year.
AND, I’m sure the main reason you’re here reading this is because I teased our K-Pop Demon Hunters Halloween costumes a couple months ago and you’ve thought of nothing else since then. Well, the wait is over:
Why 1099?
1099s are how the IRS gets small business owners to “tattle” on each other. What does that mean? Well, 1099s – specifically, 1099-NECs – tell the IRS when you’ve paid a non-employee $600 or more during the tax year. If your business paid a contractor/freelancer/vendor/service provider for services and you’d like to claim that expense as a deduction, you need to file a 1099 informing the IRS that the vendor received income from you. This puts the vendors’ income on the IRS’s radar, to avoid any under-the-table under-reporting of non-employee income. In order to secure your deduction, you as the business owner, are required to file a 1099, which reports how much you paid each *eligible* vendor (more on eligibility in a moment). Each 1099 you issue sends a form to that vendor (helping them with their own taxes) AND a copy to the IRS, giving the IRS a heads up on how much income YOUR VENDOR should be reporting. If you don’t send out 1099s to eligible vendors, then you’re left with 2 undesirable choices:
- Recategorizing that vendor’s expense as an Owner’s Distribution – and paying tax on that money: BOOO!
- Take the deduction and risk losing it if audited, along with incurring the associated penalties: Double BOOO!
Who are these *Eligible* Vendors?
Not all vendors need a 1099. The criteria are:
- Service providers only: Vendors that provide goods don’t need a 1099.
- You paid them over $600. (For vendors paid in 2026, this threshold goes to $2k, likely eliminating many 1099s from being issued!)
- You paid them from your bank account. If you paid the vendor with a credit card, the credit card company issues the 1099 to the IRS, so it’s off your shoulders.
- The vendor entity is a Sole Proprietor, LLC, LLP or Partnership -Note: a major exception here is that Lawyers always require a 1099, regardless of their entity type.
If you’re unsure of a vendor’s entity type, they should indicate it on the W9 (see below). However, some vendors forget to check the appropriate box. When in doubt, send it out! It’s better to err on the side of caution here. There’s no penalty for sending a 1099 unnecessarily, aside from the $2-$5 payment for the filing, and there is a risk to not sending one that should have gone out.
If you’re using QBO and have been including a vendor name each time you categorize an expense, here is a short video showing you how to create a list of vendors that may need a 1099:
1099 vs W-9
1099 is the form that you file with the IRS, one for each vendor.
W-9 is the form you have your vendor fill out. It collects the vendor information you need to file the 1099. The image below is linked so you can download or print the form and get it to your vendors:
The best time to collect this W-9 from your vendors is BEFORE YOU PAY THEM. People are WAY more compliant when receiving their money is contingent on their compliance. If you have vendors that you don’t expect to pay again this year, the second best time to ask them to fill out the W-9 is right now.
If you’re not using Relay bank, here’s another reason to consider switching:
Relay has an integrated ach/check bill payment system FREE with all bank accounts. Even better, the system can automatically require your vendors to submit a W-9 before they get paid! It’s another automation to keep you compliant while reserving your bandwidth for the activities that make you money.
If you don’t bank with Relay, then email the vendors from the list (see video above). Most people are accustomed to the process and will happily hand it over. The others may require some persistence, which is why now is the time to start.
Once you have the vendor’s W-9, you’ll file the 1099 after January 1st and before January 31st. You can do it within QBO if all your vendors are set up properly, or you can use websites like www.track1099.com. The hardest parts of the process are:
- accurate bookkeeping all year long (do you need help with this? Click here!)
- collecting W-9s from all eligible vendors
After that, the actual filing part is simple – you can do this!
IQBK Client Highlight
April Cook for NC Senate!!
April Cook is our client and the CEO of North Carolina Association of Free and Charitable Clinics, and she is running for NC Senate in 2026! We are so excited to share her story with you so you can join us in supporting her campaign!
As a proud fourth-generation North Carolinian with family roots in Montgomery County, April Cook has called Concord home for over 30 years. She raised her family in Cabarrus County and has spent her life grounded by faith, community, and service.
For more than two decades, April has put those values into action as Co-Founder and Executive Director of the Lake Norman Community Health Clinic, where she helped thousands of uninsured North Carolinians access affordable, quality care. While leading the clinic she co-founded, April also served on the Board of the NC Association of Free and Charitable Clinics (NCAFCC) for 10 years, including two as Board Chair.
In 2022, April was named CEO of the NCAFCC, where she now represents and advocates for all free and charitable clinics across North Carolina—continuing her lifelong mission to ensure that no one goes without care.
From volunteering at local churches to leading mission trips in Guatemala and Haiti, April’s dedication to service has always extended beyond herself. Recognized with honors like the Charlotte Business Journal’s Excellence in Healthcare Award and Business Today’s Top Women in Business, she’s proven what compassionate, hands-on leadership looks like.
Now, April is running for North Carolina Senate District 34 to bring that same effective leadership to Raleigh—because every North Carolinian deserves dignity, opportunity, and access to care
Thanks for reading!
If you enjoyed this, please tap the heart or drop a comment. Positive reinforcement is so effective and I always want more of it.
If you want to discuss bookkeeping questions, hop on my calendar for a no-cost discovery call, I’d love to chat.
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