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1099 process

Status: Draft, pre-formation. Working SOP for the Bookkeeper to execute and the Treasurer to approve. Tuned to QuickBooks Online (QBO), which the Guild plans to use as its accounting system. Not tax advice — confirm year-specific thresholds and form versions with the Guild's tax preparer each November.

Why this matters

The IRS requires the Guild to report payments to most non-corporate service providers each year. Missing or wrong filings can trigger penalties starting at $60 per form and rising to $660+ per form for intentional disregard. The fix is simple discipline: collect a W-9 at vendor onboarding, flag the vendor as 1099-eligible at intake, and run an annual workflow that ends in QBO e-filing.

Forms the Guild may file

Form What it reports Threshold Most likely use
1099-NEC Nonemployee compensation (services) ≥ $600 Year-1 default — Administrator, Bookkeeper, designers, photographers, trainers, legal/audit fees
1099-MISC Rent, prizes/awards, attorney settlements, other ≥ $600 (≥ $10 for royalties) Venue rent (when not paid to a corporation), event prize money, legal settlements
1099-K Issued to the Guild by Stripe for payments processed Stripe handles; Guild does not issue Stripe issues this to the Guild, not the other way around
1096 Paper transmittal Only if paper-filing Avoid — e-file via QBO
W-9 Vendor's TIN and entity type (collected by the Guild, not filed) Per vendor Required of every U.S. vendor before first payment
W-8BEN / W-8BEN-E Foreign vendor declaration Per foreign vendor Required of every non-U.S. vendor; may trigger 1042-S, not 1099

E-filing is mandatory for filers of 10+ information returns under the IRS rule effective for returns due in 2024 and beyond. QBO covers this with its built-in e-file.

Who is and isn't 1099-reportable

Generally reportable on 1099-NEC

  • Sole proprietors and single-member LLCs (treated as disregarded entities, taxed as sole props)
  • Multi-member LLCs taxed as partnerships
  • Partnerships (general and limited)
  • Independent contractors operating as individuals

Generally not reportable

  • C corporations and S corporations (including LLCs that elected corporate status on Form 8832 or 2553), except:
  • Attorneys — always reportable on 1099-NEC if for legal services, regardless of entity
  • Medical and health-care payments — reportable on 1099-MISC even to corporations (rare for the Guild)
  • Sellers of goods (when payment is purely for products with no services component)
  • Tax-exempt organizations and government agencies

Always reportable regardless of entity

  • Attorney/law-firm fees for legal services (1099-NEC) — including LLP and PLLC
  • Attorney gross-proceeds (settlements where the Guild is a defendant or claimant) (1099-MISC)

When it's mixed

If a vendor invoice has both goods and services and is non-corporate, report the services portion on 1099-NEC.

Foreign vendors

Foreign vendors providing services performed entirely outside the U.S. are not on 1099-NEC; they are on 1042-S if any U.S.-source income is involved. Collect a W-8BEN (individual) or W-8BEN-E (entity) and route to the Guild's tax preparer for analysis before payment.

Backup withholding

If a vendor is 1099-eligible but the Guild does not have a current, signed W-9 with TIN at the time of payment, the Bookkeeper applies 24% backup withholding, remits it on Form 945, and reports both the gross and the withheld amount on the year-end 1099-NEC. The simpler answer: do not pay any U.S. vendor without a W-9.

Year-round process (the only way the year-end works)

Vendor onboarding (Bookkeeper, with Administrator)

For every new U.S. vendor, before the first payment is approved:

  1. Send the vendor the IRS Form W-9 via secure link
  2. Receive the completed W-9; verify TIN format (9 digits) and signature
  3. In QBO, create the vendor and enter:
  4. Legal name and business name (match W-9 exactly)
  5. Address from W-9
  6. Tax ID (EIN or SSN) in the vendor's hidden tax ID field
  7. Vendor 1099 settings: "Track payments for 1099" checkbox on for any non-corporate vendor and any attorney
  8. Federal entity type (driven by W-9 Box 3): Individual / Sole proprietor / LLC (single-member) / Partnership / S Corp / C Corp / Other
  9. Attach the W-9 PDF to the vendor record in QBO
  10. Confirm the W-9 retention plan (vendor lifetime + 4 years) per document retention policy

For every new foreign vendor: collect W-8BEN/W-8BEN-E, attach to vendor record, and flag for tax-preparer review before payment. Do not turn on the QBO 1099 tracking flag (foreign vendors are not on 1099).

Payment routing

  • All vendor payments flow through QBO Bills/Expenses or QBO-linked Bill.com (do not pay 1099-eligible vendors via Venmo, personal Cash App, or off-system; those payments are difficult to capture and cause year-end pain)
  • Stripe and PayPal payouts to vendors: Stripe and PayPal issue their own 1099-K to vendors above their thresholds; the Guild does not issue a 1099-NEC for amounts paid via those rails. Track the rail in the QBO transaction so the year-end report excludes them correctly.
  • Reimbursements for documented business expenses are not 1099-reportable; tag them as such in QBO

Quarterly hygiene (Bookkeeper)

Each quarter, before close:

  1. Run the QBO "1099 Vendor Setup" report — flag any 1099-tracked vendor missing a W-9 attachment, TIN, or address
  2. Run the vendor activity report filtered to "track 1099" vendors — confirm payments are correctly categorized
  3. Resolve any new vendor that came in without a W-9 — chase it now, not in January

Year-end workflow (the actual filing)

November (Bookkeeper + Treasurer + tax preparer)

  1. Confirm with the tax preparer:
  2. Current-year thresholds and any rule changes
  3. Whether QBO's e-file service or an alternative (Track1099, Tax1099.com) will be used
  4. Whether any state filings are required for the Guild's vendors (state-by-state matrix; many states piggyback on federal e-file via Combined Federal/State Filing Program)
  5. In QBO, run Expenses → Vendors → Prepare 1099s → Review your contractors (this becomes available each year for the prior calendar year)
  6. Generate a list of 1099-eligible vendors and their YTD totals; circulate to the Treasurer

Mid-December (Bookkeeper)

  1. Confirm every 1099-eligible vendor has:
  2. Current-year W-9 on file or a confirmed prior-year W-9 with no entity-type change
  3. Verified address (the 1099 ships there)
  4. Verified TIN
  5. Reach out to any vendor with stale or missing data — give them until December 31 to respond before the Bookkeeper applies a status adjustment
  6. Run the Excluded Payments view in QBO — confirms credit-card and Stripe-rail payments are excluded (those are reported by the processor on 1099-K)

Early January (Bookkeeper)

  1. In QBO: Expenses → Vendors → Prepare 1099s → Map accounts — confirm which expense accounts feed Box 1 of the 1099-NEC (services) and which feed 1099-MISC (rents, prizes, attorney gross proceeds)
  2. Review draft 1099 amounts vendor-by-vendor against QBO transactions; investigate any number that does not match expectation
  3. Produce a draft 1099 batch report (PDF) and send to the Treasurer

January 15–25 (Treasurer)

  1. Reviews the draft batch report
  2. Verifies any payment to an attorney or legal firm is included regardless of entity
  3. Verifies any payment for "services" to a non-corporate vendor over $600 is included
  4. Signs off (email is fine; the email goes to the volunteer record / minute-book trail) authorizing the Bookkeeper to e-file

January 25–31 (Bookkeeper)

  1. In QBO, complete Expenses → Vendors → Prepare 1099s → File:
  2. E-files with the IRS
  3. E-delivers Copy B to recipients with the recipient's emailed consent OR mails Copy B to the recipient's address on file
  4. Save the QBO confirmation of e-file as a PDF in finance/1099/<year>/ of the Guild's document store (not this repository)
  5. Save the recipient-delivery confirmations
  6. Confirm in QBO that any state e-file required has been transmitted

February (Bookkeeper)

  1. Reconcile filed 1099 totals to general ledger expense accounts feeding 1099-NEC and 1099-MISC; resolve any difference
  2. Treasurer reviews the reconciliation; signs off
  3. Memo to the Audit & Finance committee: "1099 filings completed for [year]; [N] forms filed; reconciliation tied to GL"

Common-error checklist (Treasurer's review)

Treasurer specifically checks for these before signing the batch:

  • ☐ Every attorney/legal-firm payment ≥ $600 is on the list, even if the firm is a PLLC, LLP, or PA
  • ☐ Every payment to the Administrator and Bookkeeper as 1099 contractors is reflected at the correct YTD amount
  • ☐ Reimbursed business expenses are excluded from the 1099 amount (only service fees report)
  • ☐ Credit-card and Stripe-rail payments are excluded (those are 1099-K territory)
  • ☐ No corporation appears on the list except attorneys
  • ☐ Every TIN matches the W-9 on file
  • ☐ Every recipient address matches the W-9 on file
  • ☐ Foreign vendors are handled separately by the tax preparer

Penalties to know

Issue Penalty range (2025 levels — confirm annually)
Filed within 30 days late $60 per form
Filed by Aug 1 $130 per form
Filed after Aug 1 or not filed $330 per form
Intentional disregard $660+ per form, no cap
Failure to provide payee statement Mirror penalties above
Backup withholding not collected when required Liability for the unwithheld 24%

These compound: a 1099 filed late and the recipient statement missed counts as two violations.

Recordkeeping

Record Where Retention
Signed W-9 Vendor record in QBO + finance document store Vendor lifetime + 4 years
W-8BEN / W-8BEN-E Finance document store + vendor record Vendor lifetime + 4 years
Filed 1099 batch (PDF + e-file confirmation) finance/1099/<year>/ in Guild document store 4 years from filing
Recipient delivery confirmations Same 4 years
Reconciliation memos Same; copy in board minute book 7 years

Per document retention policy. Never store any of this in the proposal repository.

Who does what (summary)

Role Responsibility
Administrator Confirms vendors are onboarded only after W-9 is on file; routes all vendor payments through QBO/Bill.com
Bookkeeper Maintains vendor records and 1099 flags in QBO; runs quarterly hygiene; prepares the year-end batch; e-files after Treasurer sign-off; reconciles
Treasurer Reviews and signs off on the batch; verifies attorney inclusions; reviews reconciliation; reports to Audit & Finance
Tax preparer Confirms current-year thresholds in November; advises on foreign-vendor and state-filing edge cases
Audit & Finance committee Receives the February memo; satisfies itself the process ran cleanly

QuickBooks Online specifics

Where in QBO What
Expenses → Vendors → Prepare 1099s The end-to-end workflow each January
Expenses → Vendors → [Vendor] → Tax settings The "Track payments for 1099" checkbox and entity type
Reports → For my accountant → 1099 Detail Pre-fly check on amounts
Reports → For my accountant → 1099 Vendor Summary Quick reconciliation view
Excluded Payments view (inside Prepare 1099s) Confirms credit-card and Stripe payments correctly excluded
QBO e-file service E-files to IRS and delivers Copy B to recipients (priced per contractor at filing time)

If the Guild adds QuickBooks Payroll, 1099 e-file is included unlimited; otherwise QBO charges per contractor at filing time. The Treasurer compares the per-contractor cost to a third-party e-filer (Track1099 or Tax1099.com) each November and chooses the lowest-friction option.

Linked documents