Ideally, PayPal would create and file them since they appear to be processing your 1099's for you, but you need to verify that. Any 1099 filed should be accompanied by a companion 1096. For contractors who didn't earn enough to trigger a 1099, they still claim the income and you still deduct the expense, but - and here is where I as a CPA tell you to call an accountant 🙂 - your records need to clearly reflect the payments. If they don't, and you get audited, or you're treating what should be statutory employees as subs, it can get messy.
