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First time business owner (hair salon). 1099s?

I'm a first time business owner learning as I go. I have a hair salon registered as an LLC. My stylists are all Independent Contractors, all weekly booth rent. Do I need to issue them a 1099 or any tax forms at all for the booth rent they paid me? My wife has been a stylist for almost 17 years and we have never received any tax forms from the salons she's worked at. I had one stylist just ask me for a "receipt" of all her booth rents paid in 2019. Is that just a receipt or some special tax form? I've only read that they should issue me a 1099-MISC. Thank you.

2 Replies
Level 15

First time business owner (hair salon). 1099s?

You should be giving them all receipts for the rent they pay as that is a good business practice in general ...  but the issuance of 1099 forms are not required ... if they were they would issue one to you for the rent they paid. 

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Level 15

First time business owner (hair salon). 1099s?

A 1099-MISC is required to be issued if *YOU* paid an individual more than $600 during the tax year. You do not issue 1099-MISCs for income received. Only for debt paid out if it exceeds $600 to any one individual.

You *REALLY* need to get professional help on this, because depending on how your business is structured it "could" be looked at as you receiving all the income produced in the business, and then "YOU" paid the independent contracts their cut. If the IRS sees it that way, then "YOU" would be the one fined for not sending out 1099-MISCs to your independent contractors "YOU" hired. Then all the fines and penalties you would have assessed on you would make the cost of professional help seem like a pittance in comparison.

So for your own sake, as well as the sake of your wallet, seek professional help on this yesterday, if not sooner. One thing to note is that if your state also taxes personal income, then if it's assessed that you should be the one issuing 1099-MISC's, those fines and penalties could be a double wammy on you.


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