What Form 1099-NEC does
Form 1099-NEC reports payments your business made to independent contractors, freelancers, and other non-employees for services during the year. If you paid someone who isn’t on your payroll to do work for your business, this is very likely the form you need to issue them.

Who you need to issue one to
Generally, any individual or unincorporated business you paid $2,000 or more during the year for services; not goods, and generally not payments to corporations (with some exceptions, like payments to attorneys). This includes freelancers, consultants, contract workers, and gig-economy-style vendors your business used.

When it’s due
1099-NEC forms are due to both the recipient and the IRS by January 31; earlier than almost every other business filing deadline, and easy to miss if you’re not tracking contractor payments as you go throughout the year rather than scrambling at year-end.

Penalties
Unlike some filings where being a little late is a minor inconvenience, missing the January 31 deadline for 1099-NEC carries actual IRS penalties per form, which scale up the longer you wait to correct it; and can double if the IRS determines the failure was intentional.

What you need to collect first
Before you can issue a 1099-NEC, you need a completed Form W-9 from each contractor; this is how you get their legal name, business type, and taxpayer ID number. The practical lesson here: collect a W-9 before you pay a new contractor, not scrambled together in January when you’re trying to file.

How Luminary can help
We track contractor payments throughout the year so nothing gets missed at year-end, make sure W-9s are collected upfront, and handle the 1099-NEC filing accurately and on time; this is one of the easiest deadlines to blow past if you’re not already set up to track it, and one of the more expensive ones to get wrong.