A woman sits at a table and looks at the piece of paper in her hand with a neutral expression. The table also holds a few more pieces of paper, a binder, an open laptop, a brown mug, and a vase holding a single yellow flower.
If you choose to file 1099 forms on paper, you will also have to file Form 1096. Among the benefits of electronically filing is the absence of this requirement. — Getty Images/staticnak1983

If you pay independent contractors or freelancers $600 or more annually, you need to report the payments to the IRS on Form 1099-NEC (nonemployee compensation). The process is relatively quick and simple for companies with just one or two 1099s, but time adds up when issuing several 1099s.

Filing electronically can save you time, but you must follow IRS guidelines. Since contractors must receive the forms by January 31, meeting the requirements well before the year begins is a good idea. Here’s what you need to know about issuing 1099 forms.

Choose a method for issuing 1099s

You can issue 1099 forms electronically or through the mail. The IRS provides digital statements. You can download and print the PDF file. Your payroll provider or accounting firm may have digital and physical copies of various business tax forms, or you could check with your local Small Business Association or tax assistance centers.

If you file Form 1099-NEC on paper, you also must print and complete Form 1096, Annual Summary and Transmittal of U.S. Information Returns. However, the IRS said, “Form 1096 is not required for filing electronically.”

According to Blue Summit Supplies, “you can handwrite a 1099 or W2.” But processing errors can occur due to illegible or inaccurate documents. Many small business owners prefer to send 1099s through email or an online service.

The IRS has several requirements for furnishing Form 1099 electronically. You can include this information in their contract or via email. Some online services may handle this for you. But take care of it early, so you don’t miss the filing deadline.

The requirements consist of:

  • Informing your contractor that you will provide a paper copy if they do not consent to an electronic form.
  • Explaining how they can withdraw consent, get a paper copy, and update their information.
  • Giving your contractor a list of software and hardware needed to view, print, and save their 1099.
  • Detailing what and how long the consent form is good for.
  • Getting written consent to send the contractor their statement electronically.

If you’re mailing a paper form to the IRS, you typically must send the 1099 by February 28 (postmarked by that date).

Riley Adams, CPA, TurboTax

Consider using low-cost online services

IRS-approved online tools can help you issue 1099 forms. The vendors offer additional features, like a taxpayer identification number (TIN) match service, free printable versions, and IRS e-filing services. Some also integrate with accounting tools such as QuickBooks, Zero, and Bill.com.

Check out the following services:

  • Track1099: It costs $2.99 for one to 20 forms, and the price decreases the more statements you buy. Track1099 also offers national and foreign postal mail services.
  • TaxBandits: Pricing starts at $2.75 per form with a federal e-file. TaxBandits offers an online retrieval option for $0.25 more per 1099.
  • efile4Biz: It costs $3.25 for an e-file, or you can choose print and mail options. Additionally, efile4Biz has direct-to-state filings.
  • eFile360: Pricing starts at $2.75 for one e-file form. Plus, with eFile360, you can verify TINs.

Gather required information

Have your freelancer fill out contract worker forms before tax time. Form W-9 provides their name, address, and tax identification number. Also, you will need to know how much you paid them during the tax year. If you don’t have a W-9 on file, ask your contractor to complete it. You can send fillable PDF copies through email or your payroll provider’s online portal.

[Read more: 5 Perks You Can Offer 1099 Workers]

Complete and send Form 1099

According to the IRS, you must make information returns available to recipients by January 31. TurboTax said, “If you’re mailing a paper form to the IRS, you typically must send the 1099 by February 28 (postmarked by that date).”

You can also upload 1099s to a secure website or use a third-party service. In this case, you must let recipients know when their statements are posted and ready for viewing. The IRS requires forms posted to a website to remain available until October 15 of the year after you originally paid the contractor.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

A message from
A $50K grand prize could be all yours.
The FedEx® Small Business Grants Program is now open. See details and apply before April 1, 2024, at 12 p.m. CT.
Apply Now!

Connect with vendors who can meet your needs

Answer a few questions to tell us more about what you're looking for, and we'll help you reach vendors who can provide you with more information, pricing, and products.