Should You Be Issuing 1099s to Your Contractors?
Here’s the deal: If you pay a contractor through Honeybook, Dubsado, Square or another payment processor, you don't need to issue them a 1099. That’s it. That’s the post!
Let’s unpack why:
Everything you need to know about issuing 1099s:
Platforms like HoneyBook, Stripe, Square, and Shopify report all payments made through them on a Form 1099-K. So, if you also issue your contractor a Form 1099-NEC, their income gets reported to the IRS twice — and that’s a paperwork mess no one wants. 😵💫
When Do You Need to Issue a 1099-NEC?
You only need to issue a 1099-NEC for payments you make outside of these platforms — think cash, checks, or direct bank transfers (wires or ACH).
What About PayPal?
Good question! Here’s the breakdown:
PayPal Goods and Services: No need to issue a 1099-NEC — PayPal handles it.
PayPal Friends & Family: Yes, you still need to issue a 1099-NEC, because it’s treated like cash (and let’s be real — you shouldn’t be using this for your business in the first place!).
Does This Happen Automatically?
Yes! If you’re paying contractors through a business payment platform like HoneyBook, there’s nothing more you or your accountant need to do. These platforms have you covered.
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Now you know — and can breathe a sigh of relief! 😌
xx, Your Numbers Gal
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