If I paid all my contractors via PayPal, do I need to issue any 1099s?
It depends! If you pay a person or business via PayPal’s Friends and Family option, you will need to send a 1099-NEC to them. When you use this method to transfer funds, PayPal assumes it’s a non-business transaction and doesn’t include it in their 1099-K.
If you paid the contractor via PayPal business, you do not have to issue the contractor a 1099-NEC. PayPal is considered a third-party merchant and they are required to issue their own 1099 forms, called a 1099-K.
Know Your Worth® – The small business owners’ simple guide to bookkeeping and taxes.
If you’re looking for a little kickstart to get your finances in order, I’d love for you to join me and my small business friends over at Know Your Worth®.
The Know Your Worth® program includes access to a Certified Public Accountant and a membership site which includes short videos and beautiful, downloadable guides that will walk you through the main topics in each lesson. Each lesson will be released on a weekly basis to ensure that you don’t get overloaded with information, and you have time to review and ask questions before proceeding. We have a private Facebook group for check-ins, questions, and accountability!