DIY Guide: How to Prepare and File Your Business’s 1099 Forms (Step-by-Step)

Issuing 1099s can feel intimidating—until you break it down into a simple system. If you paid contractors, freelancers, or other non-employees during the year, you may be required to prepare and file one or more 1099 forms with the IRS (and provide a copy to the recipient).

This guide walks you through the full process, from collecting W-9s to filing with the IRS—without needing a payroll company or CPA to do it for you.

Quick note: This is a general educational guide for business owners, not legal or tax advice.

Step 1: Know which 1099 form you need

Most small businesses deal with two forms:

✅ Form 1099-NEC (Nonemployee Compensation)

Use this form for services paid to non-employees—typically contractors and freelancers.

You generally must issue it if you paid $600 or more to a qualifying contractor during the calendar year.

Common examples:

• Freelancers (marketing, design, bookkeeping, etc.)

• Consultants

• Virtual assistants

• Independent sales reps

  
  

✅ Form 1099-MISC (Miscellaneous Information)

Use this for certain other payments, including:

• Rent

• Prizes and awards

• Certain legal settlements

• Other specific “miscellaneous” payments

  
  

Step 2: Confirm who should receive a 1099 (and who doesn’t)

You typically DO issue a 1099 when you paid:

• A person or business for services (1099-NEC)

• By cash, check, ACH, wire, or other direct payment method

• In the course of your business (not personal)

  
  

You typically DON’T issue a 1099 when:

• You paid someone via credit card, PayPal, Stripe, Venmo Goods & Services, etc.

  Those payments are generally reported by the payment processor on Form 1099-K, meaning the platform handles it.

• You paid a corporation (with exceptions—such as payments made to an attorney)

• You paid an employee (that’s a W-2 situation)

  
  

DIY tip: This is why collecting a W-9 before paying someone is so important—you’ll know their entity type and tax ID before it becomes a January emergency.

Step 3: Get a W-9 from every contractor (before you pay them)

The W-9 is the foundation of your 1099 system. It gives you:

• Legal name (and business name, if different)

• Tax classification (individual, LLC, S-corp, etc.)

• Taxpayer Identification Number (SSN or EIN)

• Address for mailing the 1099

  
  

Best practice: do it at onboarding

If you wait until January, you’ll be chasing people who are busy, traveling, or ignoring emails.

Create a rule in your business:

“No W-9, no payment.”

Step 4: Do a Full General Ledger Review (Not Just a “Vendor Report”)

Most business owners start 1099 prep by running a “Vendor Payments” or “1099 Summary” report inside QuickBooks, Xero, or their accounting software.

That’s a good starting point — but it’s not enough.

Why? Because a 1099 is ultimately based on what you actually paid to qualifying vendors during the year, and those payments can show up in the books in ways the software doesn’t automatically include in its 1099 reports.

What to do instead: Review the full General Ledger for the entire year

Run your General Ledger (GL) report for the full calendar year and review it for payments that should be included on a 1099. Specifically, scan for:

• Contractor and subcontractor expense categories

• Professional fees (consulting, accounting, marketing, etc.)

• Repairs & maintenance (if performed by contractors)

• Rents (if paid to a qualifying vendor)

• “Miscellaneous expense” or “Other expense” categories

• Reclasses and adjustments made late in the year

  
  

Your goal: identify any payments to vendors that qualify for 1099 reporting but were not captured by your software’s standard 1099 report.

⭐ Pro Tip: Watch for Journal Entries (Big DIY Mistake)

This is a major issue:

Most accounting software does not recognize qualifying 1099 payments that are coded through journal entries.

Journal entries are often used for:

• “Fixing” vendor totals

• Reclassing expenses at year-end

• Recording contractor payments after the fact

• Booking expenses that were paid outside the system

  
  

If a contractor payment was recorded via journal entry instead of a vendor bill/expense/check, there’s a good chance your 1099 report will miss it.

✅ What you should do:Search the GL for journal entries that hit contractor-related accounts and verify whether those entries represent actual vendor payments that should be included on a 1099.

What you should pull from your records (after the GL review)

Once you’ve reviewed the GL, build your final 1099 list with:

• Vendor name

• Total payments for the year

• Payment method (card/PayPal vs. check/ACH/wire)

• Category/type of payment (services vs rent, etc.)

• Whether any payments were posted via journal entry

  
  

Step 5: Match each vendor to the correct form and box

Here are the most common choices:

Form 1099-NEC

• Box 1: Nonemployee compensation (this is the big one)

  
  

Form 1099-MISC

Common boxes include:

• Box 1: Rents

• Box 3: Other income (prizes, awards, etc.)

  
  

Step 6: Prepare the actual 1099 form

Required fields you must enter correctly

• Your business name, address, phone

• Your EIN (or SSN if you’re a sole proprietor)

• Recipient name (exactly from W-9)

• Recipient address

• Recipient TIN (SSN/EIN)

• Payment amount in the correct box

  
  

Avoid these common mistakes

• Using a nickname or trade name instead of the W-9 legal name

• Mixing up the recipient name and business name lines

• Incorrect TIN or missing TIN (this is a BIG penalty trigger)

• Reporting card/PayPal payments that should be excluded

  
  

Step 7: Deliver Copy B to the contractor (recipient copy)

You must provide the contractor their copy by the annual deadline.

Delivery methods:

• Mail (recommended if you don’t have written consent for electronic delivery)

• Electronic delivery (allowed with proper consent)

  
  

Step 8: File with the IRS (and meet the deadline)

Due dates (typical rule)

For Form 1099-NEC, it’s generally due by January 31 to both:

• the recipient, and

• the IRS (paper or electronic)

  
  

For Form 1099-MISC, deadlines can differ depending on whether you file paper or electronically (recipient copy is typically still due by January 31).

If January 31 falls on a weekend or holiday, the deadline moves to the next business day.

Step 9: Decide whether you must e-file

The IRS has tightened e-filing requirements in recent years, and many businesses must file electronically depending on the total number of information returns (like 1099s and W-2s) they file in a year.

Bottom line:If you’re issuing several 1099s (and/or W-2s), don’t assume paper filing is allowed—confirm whether e-filing is required for your volume.

Step 10: Choose your filing method (DIY-friendly options)

You typically have three DIY paths:

Option A: Use IRS IRIS (electronic filing)

The IRS has been moving filers toward IRIS (Information Returns Intake System).

This is a good choice if you want a low-cost IRS-supported option, but it can take a bit to learn if you’re brand new.

Option B: Use accounting/payroll software

QuickBooks and other platforms often:

• generate 1099s,

• file them electronically, and

• send recipient copies.

  
  

If you already use bookkeeping software, this is often the simplest DIY solution.

Option C: File on paper (only if allowed)

If you qualify to paper file:

• Order official red-ink forms (you can’t print Copy A from a PDF and mail it)

• Mail the IRS copy and send recipient copies separately

  
  

Step 11: Keep proof and store everything securely

For each 1099 you issue, keep:

• The contractor’s W-9

• The payment report you used

• A copy of the 1099 (or submission confirmation)

• Mailing proof (optional but helpful)

• Any correspondence if something was corrected

  
  

Store these securely—W-9s contain sensitive taxpayer information.

Step 12: What if you mess up? (Corrections are normal)

It happens. Names get updated. Totals get adjusted. You may discover a vendor was paid by credit card after all.

Corrections are allowed—just correct it quickly and send the corrected copy to both the contractor and the IRS.

The “1099 Prep Checklist”

✅ Collect W-9s for all vendors who provide services

✅ Run your vendor payment totals for the calendar year

✅ Perform a full General Ledger review for the year

✅ Check journal entries to ensure qualifying payments weren’t missed

✅ Remove card/PayPal payments from your 1099 list

✅ Confirm which vendors meet the $600+ threshold

✅ Assign the correct form (1099-NEC vs 1099-MISC)

✅ Complete forms using W-9 data

✅ Send recipient copies by the deadline

✅ File with the IRS (e-file if required)

✅ Save proof + store W-9s securely

Final Tip: Build a “W-9 First” system and January becomes easy

The biggest reason 1099s become stressful is because businesses treat them like a January project.

Treat them like an onboarding requirement instead:

• Require W-9 before payment

• Track payment method throughout the year

• Use consistent vendor names in your bookkeeping system

• Avoid booking contractor activity through journal entries when possible (or document them clearly)

  
  

Then at year-end,