Is a business an independent contractor?

[ScottTS]

I bought a house mid-2022 and put a lot time into getting it ready to rent and only got 8 rentals in 2022.

I'm working through my first ever Schedule E and I got a question "Did You Pay Anyone $600 or More for Work Related to This Property?" and implies I should have files a 1099-NEC.
I hired a tree company to cut and trim some trees, a landscaping company to mow the grass, and a cleaning company for after each rental. I also hired a company to advertise, book, collect rents, and send me the net after their cut. They sent an email saying they aren't sending me a Schedule-K because I didn't earn enough in 2022. I'm not even sure how much I effectively paid them.

I bought a bunch of furniture and had it delivered, and bought flooring which was delivered and installed.
Lowes is a company too and I spent a lot with them.

Should I have filed a 1099-NEC for any, all, or none of these companies?

[MonikaK1 · Accepted solution]

Generally, you as the operator of a business or rental activity must file a 1099-NEC form with the IRS if you pay an unincorporated independent contractor $600 or more during a year for rental/business-related services. This includes payments to property managers, repair people, and anyone else who performs services for your rental and is not your employee. You don't need to issue them to a corporation such as Lowe's.

Any business that makes nonemployee compensation payments totaling $600 or more to at least one payee or withholds federal income tax from a nonemployee’s payment, will use this form to report those payments and withholding.

Generally, payers need to file these forms by January 31 and have no automatic 30-day extensions to file unless the business meets certain hardship conditions.

See this IRS webpage for more information.

[ScottTS]

Ok, got it.

Terminex is going tomorrow to spray around the house and I hired them online and won't even see them; I assume they are a corporation even were it a franchise situation.

Each of the others I found via local and/or online ads, they have business cards and letterhead. I know the cleaners have different people show up because when there have been issues the report noted the person that reported it. I saw the mowers once, 3 guys in a truck. The tree guy had logo on his truck. But none of that tells me conclusively if they are incorporated.

Is there a standard way to determine if a business is incorporated, or a form that when I hire a business they need to fill out basically telling me whether I should file a 1099-NEC?

[JulieS]

No, there is not a standard way to determine if a business is incorporated, but there are ways to figure it out and there is a form you can use. 

If the the name of the business includes "Inc." at the end, they are incorporated, or at least presenting themselves that way. No 1099-NEC is required.

For people who present as individuals, the best practice is to ask them to complete a W-9 form for you. Click here to get the form. 

Only the first page is filled out and you keep it. Line 3 asks for their business classification. If they select "Individual/sole proprietor or single-member LLC", you need to issue a 1099-NEC if you pay them more than $600 during the year. 

The rest of the form provides their information that you need to complete the 1099-NEC.