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Do I need to issue 1099s to cleaning subcontractors?

Yes. If you paid a cleaning subcontractor $600 or more during the calendar year and the payment was made by check, cash, or direct bank transfer (ACH), you are required to file a 1099-NEC for that person or company. This applies to sole proprietors, partnerships, and most LLCs. It does not apply to corporations (S-Corps and C-Corps are generally exempt) or to payments made by credit card, debit card, or third-party platforms like PayPal or Venmo. Those transactions get reported by the payment processor on a 1099-K instead.

The single most important thing you can do is collect a W-9 from every subcontractor before you make the first payment. The W-9 gives you their legal name, address, tax ID number, and entity type. Without it, you won’t know whether they’re incorporated and you won’t have the information you need to file. Chasing down W-9s in January when forms are due is stressful and often unsuccessful. Make it part of your onboarding process and don’t cut a check until you have it on file.

Cleaning businesses tend to rely heavily on subcontractors, especially for overflow work, specialty services, or covering routes. That means you might have several subs who cross the $600 threshold over the course of a year even if individual payments are small. A sub you pay $150 a week hits $600 in less than a month. Track cumulative payments per subcontractor throughout the year so January doesn’t bring surprises.

The filing deadline for 1099-NEC forms is January 31. That means forms must be submitted to the IRS and furnished to the subcontractor by that date. Late filing carries penalties that range from $60 to $310 per form depending on how late you file, and intentional disregard bumps it to $630 per form. These add up quickly if you have multiple subs.

Keep a simple spreadsheet or use your accounting software to track each subcontractor’s name, W-9 status, payment method, and year-to-date total. Beaver dam accounting services like Rock Steady can help you set this up so nothing falls through the cracks. When year-end arrives, filing becomes a matter of pulling the numbers rather than scrambling to reconstruct twelve months of payments.

If you’re unsure whether a worker qualifies as a subcontractor versus an employee, that’s a separate and important question. Misclassifying employees as subcontractors creates much bigger problems than a missed 1099. But assuming the classification is correct, 1099 preparation is straightforward when you collect the right paperwork upfront and track payments consistently throughout the year.

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More Questions

How do agencies account for media pass-through spend (ads)?

Book ad spend at full value, either as a reimbursable expense billed at cost or as revenue with matching COGS if you mark it up. Never book the net amount only. Gross reporting matters for revenue recognition and financial accuracy.

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What's prime cost and why does it matter for a restaurant?

Prime cost is your food cost plus your total labor cost, including payroll taxes and benefits. Most restaurants should target 60 to 65 percent of sales. Tracking it weekly helps you catch problems before they eat into your profit.

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What's the best way to track equipment and fuel costs for a landscaping company?

Equipment over $2,500 gets capitalized and depreciated as a fixed asset. Smaller tools are expensed immediately. Fuel is best tracked per truck or crew using fuel cards that feed into your accounting software for job-level cost allocation.

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How do I track recurring cleaning contracts in QuickBooks?

Use recurring invoices for each contract and set up classes or customer types to separate monthly contract revenue from one-time jobs. This gives you a clear view of your monthly recurring revenue.

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Should a landscaping business use cash or accrual accounting?

Most landscaping businesses do well on cash basis accounting. It's simpler, widely accepted, and works especially well for maintenance-focused operations with short billing cycles. Accrual becomes worth considering when you regularly take on large installation projects that span multiple weeks or months.

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What's the difference between food cost percentage and beverage cost percentage?

Both measure how much of your sales go toward product, but they're calculated and tracked separately. Food cost percentage equals food COGS divided by food sales. Beverage cost percentage equals beverage COGS divided by beverage sales.

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Small business bookkeeping firm based in Beaver Dam, Wisconsin. Bookkeeping, financial strategy, and fractional CFO services built around helping owners understand their numbers and plan ahead. Founded by Laura Prater, a QuickBooks Certified ProAdvisor with over a decade of accounting experience.

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