What do I need to gather when paying a subcontractor, and why?

Paying a subcontractor, collecting their W9, and issuing a 1099-NEC to them AND THE IRS at year end is one of the biggest compliance errors that new business owners make.

When you pay someone for work, there is no proof of that payment sent to the IRS, like employees have a W2 issued to the IRS at year-end, credit card processors issue 1099-Ks to businesses, etc.

So as the business owner you are required to tell the IRS about payments you made to someone else. And you are required to issue that 1099-NEC to the subcontractors too. If you don't do this, you better not take the expense because you don't know if the other person is claiming that income on their tax return.

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Видео What do I need to gather when paying a subcontractor, and why? канала ENGAGE CPAs LLC