If you pay an unincorporated subcontractor $2,000 or more for services in a year, yes — you owe them a Form 1099-NEC, due January 31. (That number is new: a 2025 tax law raised the long-standing $600 threshold to $2,000 starting with payments made in 2026.) Collect a W-9 before the first check, track payments all year in your books, and 1099 season takes an hour instead of a week. Here's the full picture.

Every January, contractors across Jacksonville and Duval County dig through twelve months of bank statements trying to reconstruct what they paid their subs. It's avoidable. This guide covers the rules that actually apply — the new $2,000 threshold, the W-9, the deadline, the employee-vs-contractor line — and the year-round habit that makes all of it painless. (This is general guidance, not tax advice — confirm your specific situation with your accountant.)

The $2,000 rule: when a 1099-NEC is required

  • $2,000 or more in a calendar year. Starting with payments made on or after January 1, 2026, pay a subcontractor $2,000 or more in total for services during the year and you must issue a 1099-NEC. The threshold sat at $600 for decades before a 2025 tax law raised it, and it's set to adjust for inflation from 2027 — so confirm the current-year figure with your accountant. It's the yearly total, not per job: a $1,400 framing repair plus three $250 punch-out visits from the same sub put you over the line.
  • Services count; materials alone don't. The form reports nonemployee compensation — labor and services. Payments purely for materials or goods don't count toward the $2,000. When a sub bills labor and materials together, have them separate the two on the invoice and ask your accountant how to report it.
  • Unincorporated subs. Sole proprietors, partnerships, and most LLCs get one. Corporations — C-corp or S-corp — are generally exempt, with a few exceptions (attorney fees being the classic one). You never have to guess: the W-9 tells you.
  • Due January 31. The form goes to the subcontractor and to the IRS by January 31 — one of the earliest deadlines on the tax calendar.

File late or not at all, and IRS penalties currently run from $60 to over $300 per form depending on how late — and each sub effectively counts twice, because the IRS copy and the sub's copy are separate obligations.

Get the W-9 before the first check — not in January

The W-9 is a one-page form your sub fills out with their legal name, tax classification, and taxpayer ID number. It answers both questions that matter: does this sub need a 1099 at all, and what name and number go on it. Collect one from every sub regardless of the dollar amount — thresholds move (the 1099 line just did), and the W-9 in the file is what saves you in January.

No W-9, no check. Collect it before the first payment, when you have all the leverage — not in January, when the sub who framed your Arlington remodel back in March has a new phone number.

There's teeth behind that rule: if a sub won't provide a taxpayer ID, the IRS expects you to hold back 24% backup withholding from every payment and send it in. Nobody wants to run withholding on a framing crew — so make the W-9 part of onboarding, right next to the certificate of insurance.

"They're an LLC" doesn't mean "no 1099"

A single-member LLC, or an LLC taxed as a partnership, gets a 1099-NEC. An LLC that elected S-corp or C-corp taxation generally doesn't. The tax-classification box on the W-9 is exactly where you find out — one more reason to have it on file before the money moves.

1099 contractor vs. W-2 employee: the test in plain terms

Here's where the real risk lives. Handing someone a 1099 doesn't make them a contractor — the IRS and the State of Florida look at the actual working relationship. Three plain-terms questions:

  1. Who controls the work? If you set their hours, direct how the work gets done, and hand them your tools, that looks like an employee. A true sub controls their own methods, crew, and schedule — you're buying a finished result.
  2. Whose business is it? A contractor carries their own insurance, invoices you, covers their own costs, and works for other builders too. If you're their only paycheck and they can't lose money on a job, that leans employee.
  3. How permanent is it? Job-by-job engagements look like contracting. Someone on your crew every morning, indefinitely, doing the core work of your company looks like an employee — whatever the two of you agreed to call it.

Why getting it wrong hurts in Florida

  • Back federal payroll taxes. The IRS can assess the employer's share of Social Security and Medicare — 7.65% of everything you paid — plus a slice of the income-tax withholding you never collected, plus penalties and interest.
  • Florida reemployment tax. Florida has no state income tax, but it does tax employers for reemployment (unemployment) — new employers pay 2.7% on the first $7,000 of each employee's wages. Misclassified workers mean back assessments here too.
  • Workers' comp exposure. This one bites construction hardest: Florida requires construction businesses to carry workers' comp from the first employee, while most other industries don't hit the requirement until four. A "sub" with no coverage and no exemption certificate can get picked up as your employee at your workers' comp audit — and the premium adjustment lands on you.

The answer isn't panic — it's classifying honestly and papering the file: signed agreements, W-9s, certificates of insurance, real invoices. If a relationship is genuinely gray, talk to your accountant before an auditor makes it their conversation.

The year-round system that makes January painless

Contractors who dread 1099 season are almost always reconstructing a year of payments after the fact. The fix is a system:

  1. W-9 at onboarding. Every new sub hands over a W-9 and a certificate of insurance before the first check. File both.
  2. Flag them as a 1099 vendor in QuickBooks the day you create the vendor — from then on, every payment tallies itself.
  3. Pay from the business account, every time. Sub payments from a personal card or untracked cash are the number-one reason 1099 totals come out wrong.
  4. Reconcile monthly. Current books mean your 1099 totals are already right on December 31. If the books are months behind, the 1099s are only the first symptom — here's how catch-up bookkeeping works for Jacksonville contractors and what it takes to get current.
  5. Code payments to jobs while you're at it. The same discipline that makes 1099s automatic also shows you which jobs actually made money — that's job costing, and it changes how you bid.

Do that, and January is an hour of review and filing — not a week of bank-statement archaeology.

The five 1099 mistakes I see most

  • Counting per job instead of per year. A run of smaller invoices from the same sub adds up past $2,000 — the test is annual.
  • Assuming every LLC is exempt. Most LLCs still get a 1099; only corporate-taxed ones generally don't. Check the W-9, not the truck door.
  • Paying subs through Zelle or in cash with no record. Zelle doesn't issue tax forms, so those payments are entirely yours to track and report. (Credit-card and payment-platform business payments are different — the processor reports those on a 1099-K, and you generally leave them off your 1099-NEC. Ask your accountant which bucket yours fall in.)
  • Chasing W-9s in January. By then your leverage — the next check — is gone.
  • Calling a full-time crew member a contractor. The most expensive mistake on the list, because it compounds: payroll taxes, reemployment tax, and workers' comp all run backwards.

Get your 1099 house in order — in English or Spanish

A lot of Northeast Florida construction runs in Spanish, and 1099 rules explained through a translation app is how W-9s go missing and misclassification goes unnoticed. At Seaside Business Solutions on Rogero Road in Arlington, subcontractor tracking — W-9s, payment totals, year-end 1099s, and the employee-vs-contractor questions in between — is part of everyday bookkeeping for Jacksonville contractors, in English and Spanish. (Esta guía también está disponible en español.) If you want to know where your sub tracking stands before January gets here, a free first look at your books will tell you straight.