First let's start by addressing the name change, a 1099-nec and 1099-misc are not the same thing however until 2020 the 1099 misc was used for reporting non- employee compensation where as now the 1099-NEC is used for this purpose.
Now that we have that all cleared up who gets a 1099- NEC? Any individual not on the payroll on a contract to complete a project or assignment, who was paid more than $600.00
So in plan English what this means is if you made an individual more than $600.00 to do graphic design, social media manager, design your website, update your SEO, ETC, and they are not an S-corp or C- corp you would issue them a 1099- NEC.
Do you have to have a contact? NO, this is just a way of saying that you agreed on a task and price, however they are not an employee because you did not provide set hours or specifications on how they must complete this task.
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Let’s talk about the “B” word.
Not that “B” word… Get your head out of the gutter.
The word I’m talking about is BOOKKEEPING. Unless you’re one of those awesome nerds (like me) who just love math and money, it’s the vain of your existence. It’s tedious, it’s complicated, and it’s the thing that helps you lose money to taxes.
If you don’t keep track of your expenses and books throughout the year, you will be crying come tax season. So much gets factored into taxes for small product-based businesses. If you aren’t adding to your lists every month, if not every week, you will end up spending a big chunk of money hiring someone to help you sort it out.
Don’t be that person. Keep up with it now, so that you can coast into tax season with a smile on your face instead of etching in a few more frown lines.
Maintaining your books and submitting your taxes is not pleasant, but...