1099 Contractors: What Business Owners Should Track (Basics)

Paying contractors is normal. Messing up contractor tracking is also normal, until tax time shows up and you’re trying to remember who you paid, how much, and whether they need a 1099. The good news is that this is easy to fix with a simple system. You’re not alone, most small businesses don’t track contractor payments correctly until they’ve been burned once.

Quick Answer

• What to track for contractors

• How to stay organized year-round

• A simple monthly routine

• When to get help cleaning contractor records
   

The Real Problem

What we often see:

• Contractor payments mixed with other expenses

• No W-9 on file and/or missing documentation

• Paying via Zelle/Venmo with no memo

• No totals by contractor at year-end
   

Why It Matters

• Incorrect 1099 preparation

• Missed documentation

• Extra CPA fees and stress

• Potential compliance issues
   

Simple Framework
 

Collect → Track → Review
 

1. Collect W-9 (and basic info) upfront

2. Track payments consistently

3. Review totals quarterly and at year-end
    

DIY Action Plan

Today: Create a contractor list (name, email, payment method).
This week: Request W-9s for active contractors.
Monthly: Categorize contractor payments properly and tag them.
 

Common Mistakes

• Categorizing contractors as supplies

• Paying from personal accounts

• No consistent naming in transactions

• Waiting until January to ask for W-9s
   

Tools + Templates

• Contractor tracker spreadsheet

• “New contractor packet” checklist
   

When to Get Help

• You’ve paid many contractors across multiple platforms

• You’re behind and need totals fast

• You’re unsure who qualifies for 1099 handling
  
  If you’re behind or unsure, a bookkeeping cleanup can help your contractor get their tracking and reports back on track quickly.
   

Working With Us

• We track contractor payments, keep your books clean, and make year-end smoother for your CPA.
   

If you’ve paid contractors and want to be sure you’re tracking everything correctly, we can help you get organized now so year-end is simple. If you’d like clean, accurate numbers you can trust, we can help. Book a quick call, and we’ll tell you whether you need a cleanup, monthly bookkeeping, or just a simple system.



 

FAQ

Do I need a W-9 for every contractor? Commonly, yes for tracking and reporting—confirm with your CPA.
What if I didn’t collect W-9s? Start now and establish a process for the future.
Can QuickBooks track this? Yes, when set up properly.
 

Summary

• Track contractors year-round, not at year-end

• Collect W-9s early

• Keep payments clean and categorized