Hey guys, love the show and the Tax and Legal Playbook! I’m hoping to get my hands on the Self-Directed IRA Handbook soon, too. Thanks for all you do for small business owners.
My question is about how to know when you need to 1099 a contractor or company. My rule of thumb has been that if they use their personal name, I should have them fill out the forms if I pay over $600. If they use a business name, however, I leave the onus on them. It’s none of my business whether they’re a sole prop, partnership, S or C corp, so I don’t ask. If the contractor doesn’t ask me for forms, I won’t 1099 them. Is this wrong? Do I need to be asking everyone? I have a feeling if I ask their tax status most people will lie and tell me they don’t need a 1099. Should I at least get their denial in writing in case shtf so I can deduct the expenses?
Example: Lawn care service. What are the odds a small local mowing business is actually a C-corp / exempt from getting a 1099 from me? At the same time, who’s really filing forms for a very legit seeming company, whether for business or personal lawn services?
Thank you