Filing 1099s: What it costs and a faster way
Michel Myara is co-founder and product designer at looch, where he designs the tools small businesses use to get paid, manage spend, and run their books.
If you paid an independent contractor for work this year, you probably owe them a 1099. The short version: file a Form 1099-NEC for each non-employee you paid at least $600 for services in the course of your business, and get it to both the IRS and the contractor by January 31. (irs.gov)
That is the rule most owners trip over. This guide explains who has to file, where the manual process breaks down, what it costs to hand off to an accountant, and how looch does the whole thing for $2 per form.
Who has to file a 1099-NEC, and by when
You file a 1099-NEC when all of these are true:
- You paid someone who is not your employee.
- The payment was for services in the course of your trade or business.
- The total you paid that person during the year was at least $600. (irs.gov)
The deadline is firm. You must file Form 1099-NEC with the IRS and furnish the recipient copy to the contractor by January 31. (irs.gov) There is no separate, later date for the IRS copy the way there is with some other forms.
Two details worth knowing. First, the reporting threshold rises to $2,000 for payments made after December 31, 2025, so the bar for newer payments is higher than the long-standing $600. (irs.gov) Second, if you have 10 or more information returns to file, the IRS requires you to file them electronically. (irs.gov)
Pay a contractor $600 or more for services, and a 1099-NEC is due to them and the IRS by January 31.
The manual process, and where it goes wrong
Doing 1099s by hand is a series of small steps that each have a way to fail.
You start by collecting a Form W-9 from every contractor so you have a correct legal name, address, and taxpayer ID. Then you total what you paid each one across the year, decide who clears the threshold, fill out a 1099-NEC for each, send the recipient copy, and file with the IRS.
The breakages are predictable:
- You miss someone. A contractor you paid in three separate batches looks like three small payments, not one reportable total.
- You count the wrong things. Some payments belong on a 1099, some do not, and pulling that apart from a year of bank and card activity by hand is slow and error-prone.
- The W-9 is stale or missing. A wrong taxpayer ID can mean a rejected filing or backup withholding problems later.
- You run late. January is a busy month, and the penalty for filing late is per form, not a flat fee.
That last point has teeth. For returns due in 2026, the late-filing penalty runs from $60 per form if you are up to 30 days late, to $130 per form after that through August 1, to $340 per form if you file after August 1 or not at all, with higher amounts for intentional disregard. (irs.gov) Multiply by a handful of contractors and a missed deadline gets expensive fast.
What it costs to hand 1099s to an accountant
Handing 1099s to a CPA or bookkeeper is a reasonable choice, and it is not free. Pricing usually combines a setup or base fee with a per-form charge, so the more contractors you have, the more it grows.
A few real examples from accounting firms:
- One CPA firm charges $140 for the first 1099 plus $60 for each additional form, which covers preparing the forms, mailing recipient copies, and filing with the government. (mkatzcpa.com)
- Another lists $375 for annual federal 1099 filing for up to 5 contractors, plus $15 for each additional contractor. (taxhappens.com)
- A third sets a $300 minimum to get started, applied against the final invoice once forms are filed. (omega-accounting.com)
Put together, prepared-and-filed 1099 service commonly lands in the low hundreds and climbs from there with volume, with broader estimates often quoted in the $150 to $500-plus range. (linkedin.com) You are paying for someone else's time and judgment, which is worth it when your books are messy. It is a lot to pay when the only hard part was figuring out who to include.
How looch makes it seamless
This is the part the manual process and the per-form invoice both get wrong: the hard work is the math, not the paperwork.
AI-powered 1099 calculation and filing is built into looch. looch AI scans your transactions and payment methods to determine what to include, so the question of who crosses the threshold and what counts is answered from your actual activity instead of a spreadsheet you assemble by hand. The error-prone steps, totaling each contractor and deciding what is reportable, are the steps looch does for you.
When it is time to submit, instant 1099 filing costs $2 per filing. Compare that to a base fee plus per-form charges and the gap is obvious, especially as your contractor count grows. You can see the current numbers on the looch pricing page and how the filing flow fits into the rest of the product on the features page.
If you are not on looch yet, you can form your business and open no-fee financial accounts with looch Start, which comes with real-time accounting, so your transactions are already organized when 1099 season arrives.
When you should still call a professional
looch makes routine 1099 filing fast and cheap, and routine covers most small businesses. It does not replace a tax professional for genuinely complex situations: multi-state issues, unusual entity structures, contractors who may actually be employees, prior-year corrections, or anything where you need real tax advice rather than filing. If you are unsure which payments are reportable in a tricky case, ask a pro.
For the common case, paying contractors and filing the forms on time, the work should not cost you a busy January or a few hundred dollars. With looch, it is $2 a form and a system that already knows who to include.
