December often brings a long list of tasks for business owners, and 1099 preparation tends to sit quietly in the background until it is almost too late. Taking time this month to organize contractor information can make January far less chaotic. The goal is simple: collect what is missing, confirm what is already in place, and start the new year with accurate records.
Here’s why December is an ideal time to prepare, what contractors need attention, and how proper paperwork keeps the filing process smooth.
Why December Matters for 1099 Preparation
As soon as January arrives, owners are pulled toward payroll updates, vendor questions, and all the tasks that come with a new year. Preparing in December keeps the process manageable because there is still time to reach out to contractors and confirm details before deadlines tighten.
When information is gathered early, a business can avoid rushed phone calls, incomplete records, or last-minute follow-ups. This early work keeps the process steady and helps the owner stay organized during a busy season.
Why the W-9 Is Essential
Accurate 1099 filing starts with a completed W-9. The form provides the contractor’s tax ID number, address, business name, and tax classification. Without it, the business cannot report payments correctly.
December is a practical moment to review vendor lists and confirm that every contractor paid during the year has submitted a W-9. Many owners choose to request the form before issuing a first payment, which keeps records current and avoids delays when filings are due.
Which Contractors Should Receive a 1099
Not every vendor requires a 1099, so understanding the rules can help a business avoid mistakes. In most cases, a 1099-NEC is issued to contractors who received 600 or more for services during the year. These contractors often operate as sole proprietors, single-member LLCs, partnerships, or other unincorporated businesses.
Corporations are usually excluded, although some industries, such as legal and certain medical services, may differ. The information on the W-9 helps identify the contractor’s classification, making it easier to determine whether a form is needed.
How Payment Methods Influence Reporting
The way a contractor is paid can determine whether a business sends a 1099. Payments made by credit card or through third-party processors like PayPal, Venmo, business accounts, or CashApp business accounts are reported by the payment platform. In those cases, the business does not issue a 1099 for those amounts. Payments made by cash, check, Zelle, ACH, or bank transfer follow different rules.
When paid through these methods, the business is responsible for reporting the total and issuing the 1099-NEC. Understanding these distinctions prevents duplicate reporting and helps owners identify which vendors require forms.
Organizing Information Before Year-End
December is a helpful time to confirm that contractor records are complete. This includes verifying addresses, cross-checking totals for the year, and reviewing which payments were made through third-party platforms. It also gives the owner time to identify vendors who do not require a 1099 and make a note of any missing documents. Completing these tasks before January keeps the filing process straightforward and reduces the chance of errors or delays.
If managing contractor records or preparing 1099s feels overwhelming this season, A Better Business Solution is ready to help. Our team can review your vendor information, clean up your books, update your QuickBooks file, or take care of your 1099 reporting so everything is accurate before January arrives. When you want steady support from people who understand the pace of year-end, we are here to make the process easier. Reach out today.