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 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.
Be Your Own CFO – 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 Be Your Own CFO.
The Be Your Own CFO 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!