Payments to corporations
Most payments to corporations (other than attorneys and medical/health-care providers) are NOT subject to 1099 reporting. The W-9 from a corporation will indicate corporate status — verify against the state Secretary of State if the W-9 says "C corporation" or "S corporation".
Payments under $600
Total payments to a single recipient must reach $600 in the calendar year before reporting is required. Track cumulative payments — many small businesses miss the threshold by treating each engagement separately.
Payments via card or third-party network
Payments by credit/debit card or through a third-party network (PayPal Business, Venmo Business, Stripe) are reported on 1099-K by the processor — you do NOT issue a 1099-NEC. Payments by check, ACH, wire, or cash DO require 1099-NEC.
Personal payments
Payments not made in the course of a trade or business are not 1099-reportable. A personal home-improvement contractor hired for your own residence is not a 1099. A landlord who hires a contractor for personal property is generally not in a trade or business unless rentals rise to that level.
Reimbursements through accountable plan
Expense reimbursements paid under an "accountable plan" (substantiated, returned-excess, business connection) are not wages and not 1099-reportable. Without an accountable plan, reimbursements may need to be reported on the worker's W-2 or 1099 as compensation.
Common mistakes worth avoiding
The recurring mistakes filers make on this topic cluster in three patterns: (1) optimizing for current-year tax at the expense of multi-year tax, (2) treating the choice as binary when the IRS framework actually allows nuance (partial elections, hybrid methods, year-by-year reassessments), and (3) deferring the analysis until the return is due rather than running it during the year when the result can still influence behavior. A short annual review — even thirty minutes — catches all three failure modes and replaces vague intuition with documented reasoning.
When to bring in a professional
DIY tax software handles most small-business returns competently, but a handful of situations reliably justify a CPA or enrolled agent: an entity formation or election, a multi-state filing situation, a significant fixed-asset purchase that triggers Section 179 or bonus depreciation modeling, a retirement-plan setup, an IRS notice or examination, and the year of an entity sale. Outside those situations, software plus an annual half-day of personal review produces a defensible return. The cheapest professional engagement is a one-hour consultation rather than a full-service tax-prep relationship.