Running a business in South Carolina comes with many responsibilities, and one of the most commonly missed ones shows up right at the beginning of the year. While business owners are focused on closing their books and preparing for tax season, an important federal deadline quietly approaches: January 31.
If you worked with contractors, freelancers, or other non employees during the year, this deadline can’t be ignored.
The Deadline Is Here (Why January 31 Matters)
The start of a new year is hectic. Payroll reports, tax planning, and financial clean up all compete for attention. That’s exactly why many business owners miss one critical requirement: Form 1099-NEC.
The Rule (Plain and Clear)
If your South Carolina business paid $600 or more for services to a contractor, freelancer, or other non-employee during the year, you generally must file Form 1099-NEC by January 31 of the following year.
This deadline applies every year. Missing it can result in penalties even if the payment itself was legitimate and properly recorded.
Who Must Receive a 1099-NEC? The Checklist
To remove confusion, here is the straightforward test. You generally must issue Form 1099-NEC if all of the following apply:
- Not an Employee: The worker did not receive a W-2
- Services, Not Products: The payment was for services (e.g., labor, consulting, repairs, legal services), not physical goods
- $600 Threshold: The total paid during the year was $600 or more
- Entity Type: The recipient is an individual, sole proprietor, partnership, or LLC (that is not taxed as a corporation)
Common Examples
If you paid any of the following $600 or more for services, a 1099-NEC is often required:
- Plumbers, electricians, or landscapers
- Independent consultants or coaches
- Designers, web developers, or marketers
- Cleaning or maintenance services
- Freelancers and gig workers
If they were not on payroll, this form likely applies
Who Does Not Receive a 1099-NEC? The Money-Saver Section
This is where many businesses either over file or file incorrectly.
A. Corporations
In most cases, you do not issue Form 1099-NEC to:
- S-Corporations
- C-Corporations
This is why collecting and reviewing a Form W-9 from every contractor is essential. The W-9 confirms how the business is classified for reporting purposes.
B. Credit Cards & Payment Apps The Big Exception
If you paid a contractor using:
- Credit card
- Debit card
- Third-party payment processors (PayPal, Venmo Business, Stripe)
You generally do not issue a 1099-NEC.
Why?
These payments are typically reported by the payment processor on Form 1099-K. Issuing a 1099-NEC in addition can cause double reporting, which often leads to compliance notices or follow-up inquiries.
Critical Warning: The Zelle Trap
Do not confuse Zelle with credit card or payment processor transactions.
Zelle does not report transactions to the government on your behalf.
If you paid a contractor $600 or more via Zelle, cash, check, or direct deposit (ACH), you are generally required to file the 1099-NEC yourself. The exemption above does not apply in these cases.
The Attorney Exception A Rule Many Businesses Miss
Here’s an important exception that catches many South Carolina businesses off guard:
Payments to attorneys for legal services must be reported on Form 1099-NEC even if the law firm is a corporation.
If your business paid an attorney $600 or more, a 1099-NEC is generally required. This rule applies to:
- Contract drafting
- Legal consultations
- Business or employment legal defense
Failing to report attorney payments correctly is one of the most common 1099 errors businesses make.
How to File a 1099-NEC (Why DIY Is Risky)
The Common DIY Approach
Some business owners try to buy paper forms from office supply stores, hand-write contractor information, and mail forms manually at the last minute. This often leads to:
- Incorrect names or EINs
- Rejected filings due to incorrect paper forms or formatting requirements
- Missed delivery deadlines
- Penalties for technical errors
A Safer, Professional Approach
At JM Elitebooks, we manage the entire process accurately and efficiently:
- Collect and review W-9 forms
- Verify EINs and recipient details
- E-file 1099-NEC forms on time
- Deliver copies to contractors electronically or by mail
- Maintain proof of filing for your records
When it comes to federal reporting, accuracy matters more than speed
Penalties for Late or Incorrect Filing
Failing to file Form 1099-NEC correctly or on time can result in penalties ranging from $60 to $310 per form, depending on how late the filing is.
If you worked with multiple contractors, those penalties can add up quickly. Unlike many business expenses, penalties offer no benefit only avoidable cost.
Penalties may increase if corrections are delayed or forms are repeatedly filed incorrectly.
In most cases, professional filing costs far less than fixing mistakes later.
Why South Carolina Businesses Use JM Elitebooks
The government sets the requirements but it does not guide you through the process or warn you before mistakes happen. JM Elitebooks fills that gap.
We help South Carolina businesses with:
- Accuracy: Determining exactly who must receive a 1099-NEC
- Compliance: Meeting the January 31 deadline without stress
- Recordkeeping: Maintaining filing confirmations and documentation
- Peace of Mind: Reducing the risk of penalties, notices, and corrections
We don’t just file forms we help protect your business from preventable compliance issues.
Are You Ready for the January 31 Deadline?
Are You Ready for the January 31 Deadline?
If you are unsure whether your business needs to issue 1099-NEC forms this year, guessing is risky.
Let JM Elitebooks review your contractor payments and handle the filing correctly before the deadline arrives.
[Schedule a Filing Consultation]
Disclaimer
This content is for general informational purposes only and does not constitute legal or tax advice.