Everything Beauty Professionals Need to Know About Issuing 1099s

Alright beauty professionals, today we’re talking about arguably the sassiest of the tax forms: the 1099! You’ve probably got more than a few of these to issue this tax season, so let’s get you moving! 

Who needs to receive a 1099 from me? 

On December 23, 2022, the IRS announced that they’re delaying some of the rule changes they announced earlier in 2022. If you’re having trouble falling asleep and want to read their announcement, go for it. Or just read below about who you need to issue a 1099 to.

Anyone to whom you paid $600 or more during the calendar year (January – December) for services or rent within your business – vendors, subcontractors, landlords, lawyers, etc – should receive one. If you made rent payments, one-time service fees, gave prizes or awards, and made any other payment to a company or individual exceeding $600 for any reason relating to your business, they need a 1099 from you. 

If you are a booth rental or suite rental stylist, you need to issue a 1099 to the salon owner.

Who doesn’t need to receive a 1099 from me? 

1099s are specifically for payments made by cash, check, or electronic check. Recipients who received payments through a merchant processor account such as a credit card or to a business PayPal account will not need a 1099 from you: in this case, both the credit card merchant and PayPal will issue 1099s as needed. 

Merchant processors issue 1099s for business owners who have had $20,000 worth of transactions for the year AND at least 200 transactions in total. This has been the rule for a long time. The IRS said they were changing it for this year and then changed their minds. Back to the old rules and we’re covering all of them here.

If the payment recipient is a Corporation or S-Corporation, they don’t need one. And if the payment was made to non-US residents for any work done entirely outside of the US – no need!  

Payments made for your personal life don’t need a 1099. 1099s are only for business transactions.

What 1099 form do I need to file?

Payments made for services are reported on 1099-NEC. 

Rent payments are claimed on the 1099-MISC, in Box 1. 

What you need in order to issue a 1099

Hopefully you’ve already given W-9s to your frequent contractors to fill out, but if you haven’t yet, now is the time. In the future, best practice is to not issue payment until you receive the W-9. You’d be surprised how quickly vendors get you your payment when you make it conditional on receiving the W-9.

The W-9 form will contain your contractor’s Taxpayer Identification Number (TIN). You’ll need this number for filling out their 1099, as well as other basic info like their full name and the name of their business. If it takes more than 5 minutes to fill out, they’re doing it wrong.

How to issue a 1099 easily 

QuickBooks is your best friend during tax season, so if you’re not already using it, this is me giving you the gentle nudge that it’s a really good idea. QuickBooks makes it easy to issue 1099 forms. If your contractor files have been kept up to date, QuickBooks will automatically transfer all needed info to your 1099 forms. Remember, friends: good bookkeeping always pays off, and so does an investment in QuickBooks! 

1099online.com is an affordable way to issue a 1099 by mail or electronically, if you don’t have or want QuickBooks. You will need the recipient’s W-9 and email address in order to issue this way.  

Deadline and penalties for late issuing of 1099 forms

The deadline to issue a 1099-NEC is Jan 31st. The deadline to issue a 1099-MISC is March 31st. There is a $50 penalty per 1099 for each month past the due date. Don’t mess around with this – penalties like this add up fast. Get those 1099s issued ASAP. Like, today. 

Your friendly CPAs are here to help you 

Have more burning questions? Not sure if a certain payment you made is 1099-able? We’ve got you covered. Reach out – we’ll get you sorted and filed, headache-free. Now go tackle those sassy forms!