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

Choosing the right vendors and service providers is a big part of running a manufacturing business. But once you’ve paid them, there’s another step you can’t afford to miss: tax reporting. That’s where the 1099 form comes in.

If your manufacturing company works with independent contractors, outside consultants, freelancers, or certain vendors, you may be required to send them IRS Form 1099-NEC or 1099-MISC at the end of the year. These forms help the IRS track income paid to non-employees, and failing to file them correctly can lead to fines or audits.

This guide explains when and why to issue 1099s, who should receive them, and what your company can do to stay compliant.

What Is a 1099 Form?

A 1099 form is an IRS document used to report various types of payments made by businesses. For manufacturing companies, the most relevant forms are:

• 1099-NEC – Used to report payments of $600 or more to independent contractors or service providers not on payroll.
• 1099-MISC – Used to report other payments like rent, prizes, or legal fees.

Think of a 1099 form as the opposite of a W-2. W-2s go to employees. 1099s go to non-employees who performed work or services for your business.

Why 1099s Matter in Manufacturing

Manufacturers often rely on outside support for tasks like:

• Equipment repair and maintenance
• IT or software implementation
• Construction and facility upgrades
• Consulting or engineering support
• Temporary staffing

These relationships aren’t always employer-employee, so they require a different kind of tax reporting.

If you paid someone $600 or more in a calendar year and they’re not an employee, there’s a good chance you need to file a 1099.

Failure to file 1099s correctly can lead to:

• IRS penalties (ranging from $60 to $310 per form)
• Increased audit risk
• Delays in tax processing
• Loss of trust with vendors or contractors

Tip: If you use contractors regularly, consider integrating 1099 tracking into your bookkeeping process early in the year.

Who Should Receive a 1099?

You must issue a 1099-NEC or 1099-MISC to any U.S.-based person or business that meets these conditions:

• You paid them $600 or more in the calendar year
• The payment was for services, not goods
• They are not a C-Corp or S-Corp (with exceptions)
• They are not on your payroll as an employee

Common Examples:

• Independent contractors (welders, mechanics, engineers)
• Freelancers (graphic designers, copywriters)
• Consulting firms (if not corporations)
• Landlords (if you rent equipment or warehouse space)
• Attorneys (even if they are incorporated)

Legal services always require a 1099—even if the law firm is a corporation.

Who Doesn’t Need a 1099?

There are a few exceptions to keep in mind:

• Corporations – Generally, payments to corporations do not require a 1099, unless it’s for legal services or medical payments.
• Product Suppliers – If you're buying raw materials, parts, or finished goods, no 1099 is needed.
• Employees – They get W-2s, not 1099s.
• Foreign Vendors – Only U.S.-based vendors require 1099s.

Unsure of someone’s status? Always collect a W-9 form up front. This form tells you if a vendor is a sole proprietor, LLC, or corporation.

When Are 1099s Due?

For the 2025 tax year (due in 2026):

• Send 1099-NEC to recipients by January 31
• File with IRS by January 31 (paper or electronic)
• 1099-MISC forms are due to recipients by January 31, but must be filed with the IRS by February 28 (paper) or March 31 (electronic)

Missing these deadlines—even unintentionally—can result in escalating penalties.

How to Prepare and File 1099s

Here’s a step-by-step process to keep your manufacturing company compliant:

1. Collect W-9s Early

Before you pay any contractor or vendor, collect a Form W-9. This form provides the legal name, tax classification, and Taxpayer Identification Number (TIN).

2. Track Payments Throughout the Year

Your bookkeeping system should track how much you’ve paid each non-employee vendor or service provider.

3. Review Payments in December

Before the year ends, review vendor totals to identify anyone who crosses the $600 threshold.

4. Issue 1099s

Use accounting software, a CPA, or a filing service to generate and send 1099-NEC or 1099-MISC forms.

5. File with the IRS

Submit copies to the IRS via paper or electronic filing. Keep a copy for your records for at least four years.

For help with reporting accuracy, review your year-end totals using your cost of goods sold (COGS) reports to confirm what payments were service-based.

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

• 1099-NEC is for non-employee compensation (the most common for manufacturing contractors)
• 1099-MISC is for other miscellaneous income like rent, royalties, or legal settlements

What If You Make a Mistake?

Mistakes happen. Here's what to do if you:

• File late – File as soon as possible. The longer you wait, the higher the fine.
• Send to the wrong vendor – File a corrected 1099.
• Report the wrong amount – Use Form 1096 and issue a corrected copy.

Being proactive is better than ignoring the issue. A good financial controller or outsourced accounting partner can help prevent common mistakes.

Best Practices for 1099 Compliance in Manufacturing

• Collect W-9s from every new vendor before the first payment
• Don’t assume a vendor is exempt—verify their entity type
• Use accounting software that flags 1099-eligible payments
• Perform a year-end 1099 audit before January
• Work with a CPA or fractional CFO for final reviews

Need help improving your internal financial processes? Start with a financial health check.

Summary: 1099s Keep You Compliant—and Covered

Manufacturing companies are busy environments. But when tax season comes around, missing a 1099 deadline—or sending it to the wrong person—can be a costly mistake. Setting up a simple 1099 process ensures your business stays in good standing with the IRS.

Issue a 1099 if:

• You paid someone $600 or more for services
• They are not your employee
• They are not a corporation (unless it’s a law firm)

When in doubt, ask your CPA or controller.

Need help managing 1099s or other tax reporting tasks in your manufacturing business? Schedule a consultation with Accounovation and stay ahead of IRS deadlines without the stress.