Who Should Receive a 1099? An Orlando Small Business Guide to Avoiding IRS Penalties
- Watchmen Mhangami
- 2 days ago
- 3 min read
If you’re a small business owner in Orlando, Florida, chances are you’ve worked with freelancers, contractors, or consultants this year. That leads to one of the most common tax questions we hear from local business owners:
If you paid a contractor, freelancer, or consultant $600 or more for services this year, you may be required to issue a Form 1099-NEC. Missing or late 1099s can lead to IRS penalties, notices, and unnecessary stress.
At Watchmen Consulting, we help Orlando-area business owners understand who should receive a 1099, who doesn’t, and how to file them correctly — so you can protect your business and avoid costly mistakes.
“Do I need to send this person a 1099?”
Issuing 1099s correctly is a key part of staying compliant with the Internal Revenue Service, and failing to do so can result in costly penalties.
This guide breaks down who should receive a 1099, who should not, and why it matters — specifically for Orlando-area small businesses.
What Is a 1099 and Why Does It Matter for Orlando Businesses?
A Form 1099-NEC is used to report payments your business made to non-employees for services.
If you operate a business in:
Orlando
Winter Park
Kissimmee
Altamonte Springs
Lake Nona
Or anywhere in Central Florida
…and you pay independent contractors, the IRS expects accurate 1099 reporting.
The IRS uses 1099s to match income reported by contractors on their tax returns — and mismatches often trigger notices.
Who Should Receive a 1099 in Florida?
You generally must issue a 1099-NEC if all of the following apply:
✔️ You paid them $600 or more during the year
This is total payments for the entire year, even if each individual payment was small.
✔️ The payment was for services, not products
Examples common among Orlando businesses:
Marketing consultants
Social media managers
Virtual assistants
Freelance designers
IT support
Bookkeepers and consultants
✔️ They are not your employee
Employees receive W-2s, not 1099s.
✔️ They are a sole proprietor, partnership, or individual
Most freelancers and independent contractors fall here.
✔️ You paid them via cash, check, Zelle, ACH, or direct deposit
Common Orlando examples that require a 1099:
A freelancer paid $2,500 for website work
A contractor paid monthly via Zelle
A consultant paid for strategy sessions
A virtual assistant paid weekly
Who Does NOT Receive a 1099?
Orlando business owners do not need to send a 1099 in these cases:
❌ Total payments were under $600
No 1099 is required if total payments for the year are below $600.
❌ Payments were for products or inventory
1099s apply to services only, not goods or supplies.
❌ Payments made to corporations
Generally, you do not issue 1099s to:
C-Corporations
S-Corporations
⚠️ Important Florida exception: Attorneys often still require a 1099, even if incorporated.
❌ Payments made through credit cards, PayPal, Stripe, or Venmo (business transactions)
These are reported separately by payment processors on Form 1099-K.
❌ Employees
Employees must receive a W-2, not a 1099.
Why Orlando Small Businesses Should Take 1099s Seriously
Many local business owners assume:
“If the contractor reports the income, I’m fine.”
Unfortunately, that’s not how the IRS sees it.
🚨 IRS Penalties for Missing or Late 1099s
Failing to issue required 1099s can lead to:
$60–$330 per form, depending on how late
Higher penalties if the IRS believes the failure was intentional
Increased audit risk
Potential loss of deductions in serious cases
These penalties apply per contractor, which adds up quickly.
Best Practice for Florida Businesses: Collect W-9s Early
The easiest way to stay compliant?
✔️ Request a W-9 before you pay any contractor
A W-9 provides:
Legal business name
Tax classification
Address
EIN or SSN
This makes January filing simple — especially for busy Orlando entrepreneurs.
How an Orlando CPA Helps You Stay Compliant
1099 rules seem straightforward, but real-life situations often aren’t.
A local Orlando CPA can help you:
Determine who actually needs a 1099
Clean up vendor lists in QuickBooks
Track contractor payments correctly
File accurate 1099s on time
Avoid IRS notices and penalties
At Watchmen Consulting, we specialize in helping Orlando and Central Florida small businesses stay compliant, organized, and protected — without the stress.
Final Takeaway for Orlando Business Owners
If you paid someone $600 or more for services, and they are not your employee or a corporation, you likely owe them a 1099.
When in doubt:✔️ Ask early✔️ File correctly✔️ Protect your business
If you’re unsure who should receive a 1099 — or want help filing them correctly — working with a local Orlando CPA can save you time, money, and headaches.
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