1099 Forms for Manufacturing Companies: Who Gets One and When?

If your shop pays outside contractors, repair techs, engineers or a landlord, some of them need a Form 1099 from you after year-end. The rules changed for 2026. The reporting threshold for most of these forms went from $600 to $2,000 for payments made after December 31, 2025.

Below is who gets a 1099, who doesn't, when the 2026 forms are due in early 2027, and how to keep the process from turning into a January scramble.

This is general information, not tax advice. Work with your CPA on your own facts.

What Is a 1099 Form?

A 1099 is an IRS information return. It reports certain payments your business made to someone who isn't your employee. You send one copy to the person you paid and one to the IRS.

For a manufacturer, two forms usually do most of the work:

• Form 1099-NEC reports nonemployee compensation: payments for services to contractors and service providers who aren't on payroll. For payments made in 2026, the threshold is $2,000 per payee for the year.
• Form 1099-MISC reports other payments, like rent, prizes and awards, and medical and health care payments, also generally at $2,000 for 2026. Royalties still use a $10 threshold, and gross proceeds paid to an attorney, like a settlement paid through the attorney, still use $600.

Think of the 1099 as the W-2 for people who aren't employees. W-2s go to employees. 1099s go to non-employees you paid for services.

The $600 threshold still applied to payments made in 2025, which were reported in early 2026. Starting with 2027 forms, the $2,000 amount is indexed for inflation, so check the number each year.

Why 1099s Matter in Manufacturing

Manufacturers pay a lot of outside people. Common examples:

• Equipment repair and maintenance techs
• IT, ERP or software implementation help
• Construction and facility work
• Outside engineering or consulting
• Freight carriers and owner-operator truckers

Those payments don't run through payroll, so they need their own reporting. The new threshold means fewer forms. A welder you used twice for $900 total in 2026 no longer needs one. But your repair vendor who billed $14,000 still does, unless an exception applies.

Getting this wrong costs money. For forms due in 2027, the IRS penalty is $60 per form if you correct it within 30 days of the deadline, $130 if you correct it by August 1, and $340 after that. If the IRS decides you intentionally ignored the rules, it's at least $690 per form. Those amounts apply separately to the IRS copy and the recipient copy.

The easy fix is to build 1099 tracking into your bookkeeping from the first payment, not the last week of January.

Who Should Receive a 1099?

Generally, you need to file a 1099-NEC or 1099-MISC for a U.S. person or business when all of these are true:

• You paid them $2,000 or more in 2026 (other amounts for royalties and attorney proceeds, as above).
• The payment was for services, rent or another reportable category, not for goods.
• They're not a C or S corporation, unless an exception applies.
• They're not your employee.
• You paid by check, ACH or wire, not by credit card.

Common Examples

• Independent contractors: welders, millwrights, mechanics, engineers.
• Freelancers: designers, programmers, writers.
• Consulting firms set up as sole proprietors, partnerships or LLCs taxed as partnerships.
• Landlords who aren't corporations, for building or equipment rent (1099-MISC).
• Attorneys, even if their firm is a corporation.

Attorneys are the exception owners miss most often. Legal fees of $2,000 or more go on a 1099-NEC even if the law firm is incorporated.

If an invoice mixes parts and labor, read it carefully. When the parts are just incidental to a service, like a repair tech who brings the replacement bearing, the IRS instructions say to report the whole payment. When you're mainly buying goods, there's no 1099.

Who Doesn't Need a 1099?

• Corporations. Payments to C and S corporations generally don't need a 1099, except for legal fees, attorney gross proceeds and medical or health care payments.
• Suppliers of goods. Raw materials, parts, tooling and finished goods don't need a 1099.
• Employees. They get a W-2. Don't put wages on a 1099.
• Card payments. If you paid by credit card or through a third-party payment network, the card processor or network reports it on Form 1099-K. You don't issue a 1099-NEC for that payment.
• Foreign vendors. A 1099 is for U.S. persons. Foreign vendors usually give you a Form W-8 instead, which has its own rules. Ask your CPA about those.

An LLC can go either way. A single-member LLC that's disregarded for tax reports under its owner. An LLC taxed as a partnership gets a 1099. An LLC that elected to be taxed as a corporation generally doesn't. The W-9 tells you which one you have.

About the 1099-K: after the 2025 law, payment networks again only have to issue one when a payee has more than $20,000 and more than 200 transactions in the year. That's mostly a question for companies receiving card payments, not paying them.

When Are 1099s Due?

For 2026 payments, filed in early 2027. When a due date falls on a weekend or legal holiday, it moves to the next business day. January 31, 2027 is a Sunday.

Form	To the recipient	To the IRS
1099-NEC	February 1, 2027	February 1, 2027 (paper or electronic)
1099-MISC	February 1, 2027 (February 16 if you report attorney gross proceeds in box 10)	March 1, 2027 on paper; March 31, 2027 electronically

If you file 10 or more information returns in total for the year, counting 1099s and W-2s together, you generally have to file electronically. The IRS has a free portal for this called IRIS, and most accounting software and filing services can e-file for you.

How to Prepare and File 1099s

Here's the process we use with clients. It's simple. The hard part is doing it through the year.

1. Collect W-9s before the first payment

Get a Form W-9 before you pay any new service vendor. It gives you the legal name, tax classification and taxpayer identification number. No W-9, no first check. If a vendor won't give you a correct TIN, you may have to withhold 24% backup withholding.

2. Track payments throughout the year

Flag 1099 vendors in your accounting system and map their payments to the right box. Then the year-end report is a report, not a project.

3. Review payments in December

In December, run a vendor payment report. Look for anyone close to or over $2,000 for services or rent. Chase missing W-9s now, while people still answer email.

4. Issue 1099s

Generate the forms from your accounting software or a filing service. Check names and TINs against the W-9s before you send them.

5. File with the IRS

File electronically if you're at 10 or more returns. Keep copies with your tax records. Our post on financial record retention covers how long to keep them.

What's the Difference Between 1099-NEC and 1099-MISC?

The NEC is for services. The MISC is for nearly everything else that's reportable.

Use this form	When you pay for
1099-NEC	Contract labor, engineering, consulting, repair work, legal fees
1099-MISC	Building or equipment rent, prizes and awards, medical payments, royalties, attorney gross proceeds such as settlements

What If You Make a Mistake?

Mistakes happen. Fix them quickly, because the penalty goes up the longer you wait.

• Filed late: file as soon as you can. Under 30 days late is the lowest penalty tier.
• Wrong amount, name or TIN: file a corrected form with the "Corrected" box checked and send the recipient a corrected copy. If you file on paper, include a Form 1096 transmittal.
• Sent a form you didn't need to: file a corrected form showing zero.

A good outsourced controller catches most of these before they go out.

Best Practices for 1099 Compliance in Manufacturing

• Collect a W-9 from every new service vendor before the first payment.
• Don't assume a vendor is a corporation. Check the W-9.
• Set up 1099 flags and box mapping in your accounting system.
• Paying by card shifts the reporting to the card processor. Weigh that against the card fees.
• Run a 1099 review in December, not late January.
• Have your CPA or controller review the list before filing.

1099s are one item on the year-end list. Our year-end tax planning guide for manufacturers covers the rest, including bonuses, equipment and inventory. And if you're buying equipment, see Section 179 vs. bonus depreciation.

If 1099s are slipping in your shop, it's usually a sign the month-end close needs work too.

How Accounovation helps with 1099s

We collect W-9s, flag vendors, prepare the 1099s and hand the list to your CPA for review. We're not your tax preparer, so we coordinate with your CPA on anything that's a judgment call. Here's how we work with your CPA.

It's part of our monthly bookkeeping and controller work and fits into a broader manufacturing tax strategy. If you want help getting 1099s off your plate, let us know.

Frequently Asked Questions

What is the 1099 threshold for 2026?

$2,000 for 1099-NEC and most 1099-MISC payments made in 2026. The old $600 threshold applied to payments made in 2025 and earlier.

When are 2026 Forms 1099-NEC due?

February 1, 2027, to both the recipient and the IRS. January 31, 2027 falls on a Sunday, so the deadline moves to the next business day.

Do I need to send a 1099 to a corporation?

Generally no. The main exceptions are legal fees, attorney gross proceeds and medical or health care payments, which are reportable even to a corporation.

Do I need a 1099 for payments made by credit card?

No. Card payments are reported by the card processor on Form 1099-K, so you don't also issue a 1099-NEC.

Do I have to file 1099s electronically?

Yes, if you file 10 or more information returns in total for the year, counting W-2s. Below that you can still file on paper.