THE 1099 THRESHOLD IS NOW $2,000 WHAT CHANGES FOR SUBCONTRACTORS IN 2026.
Under the tax law signed July 4, 2025, the threshold for filing a 1099-NEC or 1099-MISC rose from $600 to $2,000 for payments made after December 31, 2025, so it applies to the 1099s you file in early 2027 for 2026 payments. Beginning in 2027 the $2,000 is indexed for inflation. Fewer small vendors will need a 1099, and the rest of the process stays the same: collect a W-9 before the first payment and track every non-employee payment by vendor.
For a subcontractor, the change mostly affects the small vendors: a one-time equipment repair, a sign shop, a small trucking job. Your lower-tier subcontractors almost always cross $2,000, so they still get a 1099. The habit that protects you is unchanged. A W-9 collected before the first check, a vendor file in the accounting system marked for 1099 reporting and a year-end report by vendor make January a one-day job. Your state may have its own threshold, so confirm it with your CPA.
WHAT IT MEANS.
The 1099 reporting threshold is the amount a business must pay a non-employee in a calendar year before it has to file a Form 1099-NEC or 1099-MISC with the IRS, set at $2,000 for payments made after December 31, 2025.
The 1099s you file in January 2026 cover 2025 payments and still use the $600 threshold. The $2,000 threshold starts with the forms filed in early 2027.
WHERE 1099S GO WRONG FOR SUBCONTRACTORS.
No W-9 until January
The vendor got paid in April and no one asked for a W-9. In January the office is calling a lower-tier sub who has moved on, has no reason to answer and may have given a wrong tax ID. Collecting the W-9 before the first payment is the only reliable way to get it.
Vendors are not marked for 1099 reporting
When the accounting system does not know which vendors get a 1099, someone builds the list manually from the check register at year end. A vendor gets missed, or an incorporated supplier gets a 1099 it did not need. Mark each vendor when it is set up.
Workers paid on a 1099 are really employees
A higher threshold does not change who is an employee. A person who works only for you, on your schedule, with your tools and under your supervision is likely an employee however they are paid. Misclassification brings back payroll taxes, penalties and workers comp exposure.
WHAT IT LOOKS LIKE IN DOLLARS.
$600. The forms filed in January 2026 still use this figure.
$2,000, for 1099-NEC and 1099-MISC, filed in early 2027.
The $2,000 is indexed for inflation each year.
THREE HABITS THAT MAKE 1099 SEASON A ONE DAY JOB.
Make a current W-9 a requirement to set up a vendor in the system, with no exceptions for small or one-time vendors. It takes two minutes at setup and saves hours in January.
Flag every vendor that gets a 1099 when the vendor record is created, and map the payments to the right box. At year end, print the system report, review it against the $2,000 threshold and file.
Ask for the certificate of insurance at the same time as the W-9. An uninsured lower-tier sub can be added to your workers comp audit, which costs far more than a missed 1099.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
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