January brings tight deadlines for digital agencies, and 1099 filings sit at the top of the list. Miss a contractor, send incorrect info, or file late and the penalties add up fast. With the right steps and a clear process, this can be one of the easiest compliance tasks of your year.
Here is what every agency needs to know.
Who needs a 1099
Most agencies pay a mix of creatives, developers, media buyers and freelancers. Anyone who meets all the following usually needs a 1099 NEC:
- Paid six hundred dollars or more during the year
- Paid through cash, check, ACH, Venmo, Zelle or similar methods
- Not taxed on payroll
- Not a corporation except for attorneys
Common vendors who require a 1099 in agency land:
- Freelancers and contractors providing services
- Designers, editors, strategists, developers
- White label partners
- Photographers, videographers and content creators
Who does not need one
- Vendors paid entirely by credit card, PayPal Business or Stripe because those platforms issue their own 1099 K
- Corporations except attorneys
- Overseas contractors
- Team members on payroll
Which form to send
- Form 1099 NEC for services
- Form 1099 MISC for items like rent and royalties
- Form 1099 K is issued by payment processors not by you
Deadline
All copies must be sent to contractors and filed with the IRS by January 31. There is no grace period here. The deadline is hard and penalties are automatic once you miss it.
Penalties for missing or late filings
The IRS penalty schedule is per form, which means it multiplies quickly for agencies with large contractor lists.
- Filed within thirty days after the deadline results in a small penalty per form.
- Filed after thirty days but before August results in a higher penalty per form.
The key takeaway is that being early or on time is dramatically cheaper than being late. Even ten or twenty missed vendors can turn into thousands of dollars in penalties.
5 Best practices for agencies
- Always collect a W9 before paying any new vendor. This is the number one way to avoid a January crisis. If payment cannot be issued until a completed W9 is received, vendors become very motivated to send accurate information quickly.
- Never chase W9s at year end. It is the hardest time to get responses. Build the habit during onboarding and link the form to your vendor setup workflow.
- Review your vendor list quarterly to catch gaps early.
- Tag 1099 vendors correctly in QuickBooks as you go, not at the end of the year.
- Save proof of payment methods because your filing responsibility depends on how the vendor was paid.
How to pull your 1099 list in QuickBooks
- Go to Expenses
- Select Vendors
- Choose the Prepare 1099s view
- Review each vendor’s tax settings and verify W9 information
- Run the 1099 Transaction Detail Report to confirm the totals
If you see any vendor without a tax ID, pause and collect their W9 before moving forward.
Common mistakes we help agencies fix every January
- Treating overseas contractors as 1099 vendors
- Sending forms to vendors paid by credit card
- Trying to file with missing W9 information
- Not separating reimbursements from payments for services
- Waiting until the last week of January to start the review process
Need help?
If you want someone to pull your reports, clean up your vendor list, confirm W9s and file your 1099s on time, our team handles this every January for digital agencies of all sizes. We make sure everything is accurate, filed early and stress free.
