The One, Big, Beautiful Bill (OBBB) introduced a new independent contractor reporting threshold for 2026. It used to be that if a contractor did less than $600 of work in a year, you didn’t need to report it. Now, it’s $2,000 for 2026, set to increase with inflation in the future.
So, how does this affect small business owners? In this article, I’ll talk about how it may cut down administrative work, but you need to make sure you’re following state rules and dodging other common issues.
At CSI Accounting & Payroll, we’ve provided small business financial services for 60 years. We’ve seen how payroll and tax laws have changed over time, and we help our clients stay on top of things. Regarding this 1099 reporting change, we’ve been asked:
Since the reporting threshold is increasing from $600 to $2,000, that means fewer contracted jobs will need to be reported. This is especially true for low-value, one-off jobs.
You now only need to get a Form W-9 from a contractor to make a Form 1099 if their work is valued at $2,000 or more for the year.
The catch is that different states may have different thresholds. If you don’t work with a payroll specialist who can advise you (like us at CSI Accounting & Payroll), please consult your state’s website to see if the rules vary.
If you don’t have a payroll specialist to advise you, you’re more likely to have questions and run into issues. If you’re having issues with any of these things, you may want to consider working with a payroll service:
CSI can help! I’ll cover a bit of what it’s like to work with CSI to get your 1099s generated and reported next.
As a small business, you can run your 1099s through CSI’s payroll service or our monthly accounting service.
If you’re just a monthly accounting client and don’t need CSI to handle your payroll, we can do your 1099s on the accounting side.
This requires a little more work on your end because you need to write out the checks yourself. Your accountant captures this in your financial statements and creates a Form 1099 at the end of the year for each contractor over the reporting threshold, just like a payroll specialist would.
Contractors are often paid through a payroll service because many businesses already use payroll services to pay their employees.
If you go the payroll service route, CSI asks that our clients put their contractors on a typical payroll schedule so we can pay your employees and contractors at the same time. (If you usually run this through payroll but also decide to pay any contractors yourself for one-off projects, you’ll need to notify your payroll specialist so they can document it.)
At the end of the year, we need to know all contractor payments and have their W-9s before December 31st so we can generate, distribute, and file all 1099s by the January 31st deadline.
Now that you know how the 1099 threshold change affects small businesses, common issues and questions that might signal that you need to hire a professional, and how CSI helps with 1099s, are you ready to check out our payroll or monthly accounting services?
To see if we can be a good fit for your business, click the button below for a free consultation:
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