Operations
Delaware LLC hiring first US contractor: tax forms and process
Hiring a US-resident contractor requires Form W-9 and 1099-NEC reporting. Here is the simple process.
Before payment: get W-9
Have the contractor complete IRS Form W-9 with their legal name, taxpayer ID (SSN or EIN), and address. Store the W-9 with your LLC records.
If contractor refuses W-9, you must withhold 24% backup withholding from payments. Most contractors complete W-9 without issue.
During the year: track payments
Track total payments to each contractor across the calendar year. Threshold for 1099-NEC: $600+ total. Below threshold: no 1099 required.
Use accounting software (QuickBooks, Xero) or simple spreadsheet to track.
After year-end: issue 1099-NEC
By January 31: issue Form 1099-NEC to each contractor paid $600+. Includes total paid and contractor's tax ID. File copies with the IRS (paper deadline February 28; electronic March 31).
Most accounting software issues 1099s automatically. Cost: $5-15 per 1099 issued.
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