If you’ve paid $600 or more to a non‑employee this year for services in your business, you probably owe them a Form 1099‑NEC. That includes many of the outside pros creative firms rely on—think bookkeepers, renderers, installers, architects, and engineers you subcontract.
Fast answer
Send a 1099‑NEC when you’ve paid $600+ for services (cash, check, ACH) to individuals, partnerships, or LLCs taxed as individuals/partnerships. Don’t send a 1099‑NEC for payments you made by credit card or payment apps—those are reported by the processor on 1099‑K. Most C‑corps and S‑corps are exempt (attorneys are a big exception). Key due date: January 31 for 1099‑NEC to both the contractor and the IRS.
Who does get a 1099‑NEC?
You generally must file Form 1099‑NEC when all four are true:
1) the payee isn’t your employee; 2) you paid for services in your trade or business; 3) the payee is an individual, partnership, estate, or sometimes a corporation; and 4) total payments reached $600+ in the calendar year.
Common recipients in our world:
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Freelancers and independent contractors (rendering, drafting, styling, photography, social media).
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Subcontractors you engaged on projects (installers, millwork shops, trade specialists).
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Sole proprietors and single‑member LLCs (disregarded entities)—you’ll know from their Form W‑9; disregarded LLCs report the owner’s classification.
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Partnerships (including multi‑member LLCs taxed as partnerships).
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Attorneys’ fees (yes, even if the law firm is a corporation). Report fees on 1099‑NEC. (If you paid gross proceeds in a legal settlement, that’s 1099‑MISC box 10.)
Design & A/E tip: The IRS examples for 1099‑NEC explicitly include architects and engineers—so if you hired them as non‑employees, they’re in scope.
Who doesn’t get a 1099‑NEC? (Common exceptions)
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Most corporations (C‑corp or S‑corp)—you’ll see their status on Line 3 of the W‑9. (But note the attorney exception above.)
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Payments made by credit card or via third‑party networks (e.g., PayPal “Goods & Services,” Stripe, Square). Your processor files 1099‑K; you should not also file 1099‑NEC for those payments.
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Payments for merchandise or goods only (not services).
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W‑2 employees (use Form W‑2, not 1099).
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Certain corporate payments that belong on 1099‑MISC (e.g., medical/health care payments, fish purchases for resale, gross proceeds to attorneys).
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Non‑U.S. persons paid for services—those are typically reported on Form 1042‑S instead.
The payment‑method rule (avoids double reporting)
If you paid a contractor via credit card or a payment app, the processor reports on 1099‑K under IRC §6050W. You don’t issue a 1099‑NEC for those card/app payments. This is true even if the contractor is otherwise 1099‑eligible.
Deadlines you can’t miss
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Form 1099‑NEC: Due January 31 to the recipient and the IRS (paper or e‑file). For 2025 payments, that’s Monday, February 2, 2026 since Jan 31 falls on a weekend.
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Form 1099‑MISC: Furnish to recipients by Jan 31; file with IRS by Feb 28 (paper) or Mar 31 (e‑file).
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Collect W‑9s now (and why it matters)
Ask every new vendor/contractor for Form W‑9 before you pay them. It tells you their legal name, address, TIN, and tax classification (which drives whether they’re 1099‑reportable). Missing or incorrect TINs can trigger 24% backup withholding—no one wants that surprise.
How to tag 1099 vendors in Studio Designer (so January is painless)
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Create/Update the vendor record
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In the vendor’s Address/Codes area, set “1099 = Yes/No” and enter the Federal ID (EIN/SSN). Save.
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- Review totals before year‑end
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Run the 1099 Data / 1099 Summary reports to confirm who will receive a form and the amounts. (Ensure staff who run reports have the Reports > Accounting permission.)
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Edge cases we see a lot
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Single‑member LLCs: If the W‑9 shows a disregarded entity, treat the vendor based on the owner’s classification—often reportable.
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Parts & materials: If parts are incidental to the service (e.g., an installer bills for labor + a few anchors), the full amount still belongs on 1099‑NEC.
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ACH vs. apps: ACH you initiate from your bank counts like cash/check (you file 1099‑NEC). Card/app payments fall under 1099‑K.
Year‑end checklist (save this)
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✅ Confirm vendor list and tag 1099 status in Studio Designer.
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✅ Collect missing W‑9s; TIN‑match if you e‑file.
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✅ Reconcile totals by payment type (separate card/app payments).
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✅ Prepare 1099‑NEC for cash/check/ACH services of $600+.
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✅ Hit January 31 (NEC) and Feb/Mar (MISC) deadlines.
This article is written for interior design, architecture, and engineering firms—the exact market we serve—and assumes you’re working in Studio Designer for day‑to‑day accounting.
Need an extra set of eyes?
If you’d like Accounting Frontier to audit your vendor list, clean up tags in Studio Designer, and prep your 1099 run before January, we can do it. We’ll follow the IRS rules above and organize your system so next year is even easier.
This post is intended for general informational purposes only and should not be construed as tax, legal, or financial advice. Your circumstances may be unique, so please consult a qualified tax professional regarding your specific situation.
