When Do I Need to Issue 1099 Forms to Contractors? (Founder Guide, 2026)

If you paid a contractor this year, there is a good chance you need to issue a 1099. It does not matter whether the project was tiny, part-time, or a one-off engagement. This is one of the easiest compliance steps for founders to overlook, but also one of the simplest to handle when your books and documentation stay organized throughout the year.

If you want to understand how often your books should be updated to avoid surprises like this, read our guide here:
https://lucius.finance/blog/how-often-should-i-update-my-startups-books

The Quick Answer

You must issue a 1099-NEC if you paid a U.S. contractor 600 dollars or more in a calendar year for services. Designers, developers, marketers, advisors, fractional operators, and most freelancers fall into this category.

Deadline: January 31.

What Counts as a Contractor Payment

A contractor payment is any payment for services made to an individual, a sole proprietor, or an LLC taxed as a disregarded entity or partnership. The payment method does not matter. ACH, bank transfers, PayPal, Venmo (business accounts), Mercury, Relay, and checks all qualify.

If you need clarity on how these payments should line up with your books, see our guide on reconciliation:
https://lucius.finance/blog/how-should-founders-reconcile-bank-transactions

When You Do Not Need to Issue a 1099

You generally do not issue a 1099 if:

The contractor is a C-Corp or LLC taxed as a corporation
You paid them through platforms that file their own forms, such as Upwork or Fiverr
Payments were under 600 dollars
The contractor is not a U.S. person and should instead provide a W-8BEN or W-8BEN-E

If expense documentation is also a challenge, this guide can help:
https://lucius.finance/blog/how-should-founders-document-expenses

Common Founder Confusions

A few points often surprise early-stage teams:

A 1099-K issued by PayPal does not replace your 1099-NEC requirement
Paying yourself never generates a 1099
Legal fees always require reporting
Payroll tools can file 1099s, but only if contractors are configured correctly

The January Problem

Most 1099 stress comes from waiting until January. By then, founders struggle to collect W-9s, verify contractor addresses, confirm totals, and determine entity types. Contractors change emails, invoices get lost, and missing documentation slows everything down.

A continuous workflow solves this by tracking payments as they happen, rather than trying to reconstruct them at the deadline.

If tax season in general feels overwhelming, this guide can help you see the full picture for Delaware C-Corps:
https://lucius.finance/blog/what-tax-forms-does-a-delaware-c-corp-need-to-file

How Lucius Fits Into the Workflow

Lucius keeps contractor payments organized, tracks totals automatically, stores documentation, identifies whether a contractor is domestic or foreign, and keeps books clean so payroll platforms can file accurately.

However:

Lucius does not issue 1099s.
Not because a CPA is required. It is not.
But because most startups already use payroll tools like Gusto, Rippling, or Deel, which automatically generate and file 1099s when contractors are set up correctly.

Lucius focuses on keeping data clean, organized, and compliant so those systems can file without errors.

Disclaimer

Lucius is not a CPA firm. We do not provide regulated CPA services such as audits, reviews, examinations, or issuing accountant reports for lenders, regulators, or investors. This content is for general informational purposes only and is not tax or legal advice.

Final Answer

You must issue a 1099-NEC if:

You paid a U.S. contractor
600 dollars or more
For services
They were not on payroll
You paid them directly, not through a platform that files its own forms

Deadline: January 31.

The easiest way to stay compliant is to track contractor payments continuously, not once per year. Clean books and early documentation turn 1099 season into a routine task instead of a stressful scramble.

When Do I Need to Issue 1099 Forms to Contractors? (Founder Guide, 2026)

If you paid a contractor this year, there is a good chance you need to issue a 1099. It does not matter whether the project was tiny, part-time, or a one-off engagement. This is one of the easiest compliance steps for founders to overlook, but also one of the simplest to handle when your books and documentation stay organized throughout the year.

If you want to understand how often your books should be updated to avoid surprises like this, read our guide here:
https://lucius.finance/blog/how-often-should-i-update-my-startups-books

The Quick Answer

You must issue a 1099-NEC if you paid a U.S. contractor 600 dollars or more in a calendar year for services. Designers, developers, marketers, advisors, fractional operators, and most freelancers fall into this category.

Deadline: January 31.

What Counts as a Contractor Payment

A contractor payment is any payment for services made to an individual, a sole proprietor, or an LLC taxed as a disregarded entity or partnership. The payment method does not matter. ACH, bank transfers, PayPal, Venmo (business accounts), Mercury, Relay, and checks all qualify.

If you need clarity on how these payments should line up with your books, see our guide on reconciliation:
https://lucius.finance/blog/how-should-founders-reconcile-bank-transactions

When You Do Not Need to Issue a 1099

You generally do not issue a 1099 if:

The contractor is a C-Corp or LLC taxed as a corporation
You paid them through platforms that file their own forms, such as Upwork or Fiverr
Payments were under 600 dollars
The contractor is not a U.S. person and should instead provide a W-8BEN or W-8BEN-E

If expense documentation is also a challenge, this guide can help:
https://lucius.finance/blog/how-should-founders-document-expenses

Common Founder Confusions

A few points often surprise early-stage teams:

A 1099-K issued by PayPal does not replace your 1099-NEC requirement
Paying yourself never generates a 1099
Legal fees always require reporting
Payroll tools can file 1099s, but only if contractors are configured correctly

The January Problem

Most 1099 stress comes from waiting until January. By then, founders struggle to collect W-9s, verify contractor addresses, confirm totals, and determine entity types. Contractors change emails, invoices get lost, and missing documentation slows everything down.

A continuous workflow solves this by tracking payments as they happen, rather than trying to reconstruct them at the deadline.

If tax season in general feels overwhelming, this guide can help you see the full picture for Delaware C-Corps:
https://lucius.finance/blog/what-tax-forms-does-a-delaware-c-corp-need-to-file

How Lucius Fits Into the Workflow

Lucius keeps contractor payments organized, tracks totals automatically, stores documentation, identifies whether a contractor is domestic or foreign, and keeps books clean so payroll platforms can file accurately.

However:

Lucius does not issue 1099s.
Not because a CPA is required. It is not.
But because most startups already use payroll tools like Gusto, Rippling, or Deel, which automatically generate and file 1099s when contractors are set up correctly.

Lucius focuses on keeping data clean, organized, and compliant so those systems can file without errors.

Disclaimer

Lucius is not a CPA firm. We do not provide regulated CPA services such as audits, reviews, examinations, or issuing accountant reports for lenders, regulators, or investors. This content is for general informational purposes only and is not tax or legal advice.

Final Answer

You must issue a 1099-NEC if:

You paid a U.S. contractor
600 dollars or more
For services
They were not on payroll
You paid them directly, not through a platform that files its own forms

Deadline: January 31.

The easiest way to stay compliant is to track contractor payments continuously, not once per year. Clean books and early documentation turn 1099 season into a routine task instead of a stressful scramble.

When Do I Need to Issue 1099 Forms to Contractors? (Founder Guide, 2026)

If you paid a contractor this year, there is a good chance you need to issue a 1099. It does not matter whether the project was tiny, part-time, or a one-off engagement. This is one of the easiest compliance steps for founders to overlook, but also one of the simplest to handle when your books and documentation stay organized throughout the year.

If you want to understand how often your books should be updated to avoid surprises like this, read our guide here:
https://lucius.finance/blog/how-often-should-i-update-my-startups-books

The Quick Answer

You must issue a 1099-NEC if you paid a U.S. contractor 600 dollars or more in a calendar year for services. Designers, developers, marketers, advisors, fractional operators, and most freelancers fall into this category.

Deadline: January 31.

What Counts as a Contractor Payment

A contractor payment is any payment for services made to an individual, a sole proprietor, or an LLC taxed as a disregarded entity or partnership. The payment method does not matter. ACH, bank transfers, PayPal, Venmo (business accounts), Mercury, Relay, and checks all qualify.

If you need clarity on how these payments should line up with your books, see our guide on reconciliation:
https://lucius.finance/blog/how-should-founders-reconcile-bank-transactions

When You Do Not Need to Issue a 1099

You generally do not issue a 1099 if:

The contractor is a C-Corp or LLC taxed as a corporation
You paid them through platforms that file their own forms, such as Upwork or Fiverr
Payments were under 600 dollars
The contractor is not a U.S. person and should instead provide a W-8BEN or W-8BEN-E

If expense documentation is also a challenge, this guide can help:
https://lucius.finance/blog/how-should-founders-document-expenses

Common Founder Confusions

A few points often surprise early-stage teams:

A 1099-K issued by PayPal does not replace your 1099-NEC requirement
Paying yourself never generates a 1099
Legal fees always require reporting
Payroll tools can file 1099s, but only if contractors are configured correctly

The January Problem

Most 1099 stress comes from waiting until January. By then, founders struggle to collect W-9s, verify contractor addresses, confirm totals, and determine entity types. Contractors change emails, invoices get lost, and missing documentation slows everything down.

A continuous workflow solves this by tracking payments as they happen, rather than trying to reconstruct them at the deadline.

If tax season in general feels overwhelming, this guide can help you see the full picture for Delaware C-Corps:
https://lucius.finance/blog/what-tax-forms-does-a-delaware-c-corp-need-to-file

How Lucius Fits Into the Workflow

Lucius keeps contractor payments organized, tracks totals automatically, stores documentation, identifies whether a contractor is domestic or foreign, and keeps books clean so payroll platforms can file accurately.

However:

Lucius does not issue 1099s.
Not because a CPA is required. It is not.
But because most startups already use payroll tools like Gusto, Rippling, or Deel, which automatically generate and file 1099s when contractors are set up correctly.

Lucius focuses on keeping data clean, organized, and compliant so those systems can file without errors.

Disclaimer

Lucius is not a CPA firm. We do not provide regulated CPA services such as audits, reviews, examinations, or issuing accountant reports for lenders, regulators, or investors. This content is for general informational purposes only and is not tax or legal advice.

Final Answer

You must issue a 1099-NEC if:

You paid a U.S. contractor
600 dollars or more
For services
They were not on payroll
You paid them directly, not through a platform that files its own forms

Deadline: January 31.

The easiest way to stay compliant is to track contractor payments continuously, not once per year. Clean books and early documentation turn 1099 season into a routine task instead of a stressful scramble.

When Do I Need to Issue 1099 Forms to Contractors?

When Do I Need to Issue 1099 Forms to Contractors? (Founder Guide, 2026)

The Quick Answer

What Counts as a Contractor Payment

When You Do Not Need to Issue a 1099

Common Founder Confusions

The January Problem

How Lucius Fits Into the Workflow

Disclaimer

Final Answer

Related Posts

When Do I Need to Issue 1099 Forms to Contractors? (Founder Guide, 2026)

The Quick Answer

What Counts as a Contractor Payment

When You Do Not Need to Issue a 1099

Common Founder Confusions

The January Problem

How Lucius Fits Into the Workflow

Disclaimer

Final Answer

Related Posts

When Do I Need to Issue 1099 Forms to Contractors? (Founder Guide, 2026)

The Quick Answer

What Counts as a Contractor Payment

When You Do Not Need to Issue a 1099

Common Founder Confusions

The January Problem

How Lucius Fits Into the Workflow

Disclaimer

Final Answer

Related Posts

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