LJane29
Employee Tax Expert

Self employed

Hi emaeve-

 

In general, if you "contract" out work then this is the right designation but I'm going to give a little detail for each situation you described:

 

Graphic Designer "owns her own company" - if it is an acutal company (corporation, partnership) then you wouldn't need to send anything in and it would not be a "contractor".  The expense would be classified based on what service was provided.  Let's say they created your logo and packaging.  That is a Branding cost and not "contractor".  BUT if she is self-employed (just like you) then you need to have her fill out a W9 and, because you exceeded the limit of $600, you are required to file a 1099NEC and send it to her (TurboTax Self-Employed can help with this, it includes access to our website that produces and files those forms).

 

Website builder who you paid $300.  Because this payment is under the $600 limit you are not required to report it on the 1099NEC.

 

We do recommend that you have any "contractor" fill out the W9 (https://www.irs.gov/pub/irs-pdf/fw9.pdf) since you may need to file a 1099NEC by the end of the year.  For example, what if you want to update/expand your website and you pay the website builder another $300, now you've paid $600 in the year and need to file the 1099NEC.

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