As a producer, one of the last things you want to worry about (or the very last thing) is crunching numbers and managing tax documents. You’re already busy overseeing entire productions down to the smallest detail while bringing an artist’s vision to life…and now you have to manage your 1099 payments too?
It’s long overdue you get some support for your 1099 payroll–and LÜK is here to do that!
We’ve made a comprehensive guide to handling 1099 payroll for contractors, just for you. Learn how to manage and pay your talent in no time (and how we can help). You deserve it!
Table of Contents
How Does 1099 Payroll for Contractors Work?
Best practices for independent contractor payments include setting and following a payment schedule, determining payment formats, and organizing the proper payment forms–particularly 1099.
1099 Form Components & Types
There are various types of 1099 forms. Self-employed individuals usually receive a 1099-NEC from their bosses at tax time, but here is a list of some of the 1099 forms you can receive aside from being a contract worker:
- 1099-NEC: The 1099-NEC is the new form used to report income earned from an independent contractor job (also sometimes referred to as self-employment income). This form is used to report nonemployee compensation. This form includes all your information, the payer’s information, the total amount paid to you, and any possible state or federal tax withheld. Your employer should send you a form by January 31st so that you can file your taxes.
- 1099-MISC: Form 1099-MISC is a document that reports miscellaneous payments such as rent, awards, royalties, and medical and health care payments. This form is typically needed by anyone who has paid out at least $600 in any of these categories within one year.
- 1099-DIV: This is for people that own stocks or have a mutual fund that pays for dividends.
- 1099-R: The full name for this 1099 form is, 1099-R: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts. You have to fill in if the IRA gave you more than 10 dollars, or if you received another source of retirement income.
- 1099 INT: You receive this form if you have savings, checking, or any type of bank account that earns interest.
There are also :
- 1099-A: If your mortgage lender canceled part or all of your mortgage, or you went through a short sale of your house, you may receive a Form 1099-A.
- 1099-B: Form 1099-B documents income from selling numerous types of securities and certain types of bartering on bartering exchanges, generally websites.
- 1099-C: If you were able to settle debt with a lender or credit card issuer for less than you owed, you might still need to pay for the amount forgiven by the lender. If you do need to pay that amount, then you will receive this form.
- 1099-CAP: You could receive a 1099-CAP if you own shares of a company that experienced a notable shift in its capital structure and were given cash, stock, or other assets.
- 1099-G: If you were given money from the state, local, or federal government, such as a tax refund, credit, or offset, you might receive a 1099-G form. You could also be sent a 1099-G form if you used unemployment that year.
- 1099-K: If you receive $20,000 or more in income or payments for services through a credit card or a third-party payment system such as CashApp in 2022 and have had more than 200 transactions, the IRS will send you a 1099-K form summarizing those payments. Starting in 2023, the IRS is lowering the minimum amount that requires reporting to $600.
- 1099-LTC: If you get payments from your long-term care insurance or the accelerated death benefits of a life insurance policy during the year, your insurance company will submit a 1099-LTC form to the IRS.
- 1099-OID: If you purchased bonds, notes, etc., for less than the face or redemption value when it matures, you’d receive Form 1099-OID.
- 1099-Q: A 1099-Q reports any money received from a 529 plan by you, your child, or your child’s school. However, earnings in a 529 plan are usually not taxed for educational expenses, so the 1099-Q is a way to keep track of records.
- 1099-S: Anyone in charge of a sale or exchange of real estate must provide you with a statement that reports the amount of money made from the transaction.
- 1099-SA: You will get this form if you take money out of your health savings account. Usually, these withdrawals are not taxable if you use these funds for health-related expenses.
- 1099-PATR: You’ll get this form in the mail if you’re a member of a co-op and made more than $10 in dividends.
How to Determine 1099 Independent Contractors vs Employees
Before paying an independent contractor or a 1099 worker, it is important to make sure they qualify as a contractor. The Internal Revenue Service, or IRS, suggests employers look at various factors to determine whether someone is an independent contractor.
- Finance: How is the employee paid? Are you using salary? Do you provide them with any tools that they need for work? Independent contractors aren’t normally paid via salary.
- Behavior: Does the company control the way the worker gets their job, or task, done? If not, then they’re most likely a contractor.
- Relationship with the worker: What kind of relationship do you have with the worker? Do they receive any employee benefits? Did they sign a contract with a set income?
With LÜK, you won’t have to worry about this. Our life’s purpose is to make it easier for you as a producer to do your job, which is being a creative genius 🙂
LÜK Pay takes on the responsibility for paying contractors, all while following the California labor laws and the laws of all other states in the US. Our life’s purpose is to make it easier for you as a producer to do your job, which is being a creative genius, we can handle all payments to talent, even if they’re from different companies.
We also want to point out that LÜK is strictly for the chaotic world that is entertainment. We’re here to help producers, casting directors, talent, and more have a more positive experience doing what they love above all else.
How to Manage Your 1099 Payroll & Payments
1. Correctly Classify Employees
The first step to avoiding the IRS at your door is correctly classifying the talent you worked with.
If you work in the entertainment industry, it can be difficult to classify the talent that you’ve worked with. Instead of trying your hand at financing, you can use LÜK.
Our system automatically classifies talent, pays them with one invoice, and files and stores all the information needed to send out 1099 forms in time for tax season.
2. Have Independent Contractors Fill out W-9 Forms
If you’re working with an independent contractor, you’ll need them to complete a W-9 form. This federal tax form requires the contractor’s name and Social Security number. Make sure they complete the form before they start working so that you can report their earnings on Form 1099 at the end of the year.
3. Set Up Timely & Accurate 1099 Payments
Independent contractors don’t receive a yearly salary, so you’ll need to determine how much they should get paid per job or hour and how often you both would like the payments to be made.
Make sure you and the contractor, or in this case, talent, agree on how often they get paid. If they only worked with you for one project, they should be paid once it is finished. However, if the production lasts for weeks or even months, then you should talk with the talent about how often they would like to be paid for the duration of that project.
The bottom line is that you must honor your commitment to timely paying talent. Whatever pay period you and the contractor agreed on is when they should be paid. This can be hard if you have multiple contractors in multiple time zones. You could find yourself confused or spending too much time trying to pay your employees on time.
Don’t worry. LÜK is more than capable of handling this for you!
We know better than anyone that in the entertainment industry, time is money. LÜK Pay is our unique feature that pays talent on time without the extra brain work. Talent is grouped in one invoice, even if they’re from different agencies, and the payment is sent to the account of their choice. It’s that easy!
4. Manage Payroll Taxes with 1099 Forms
Having your documents in order is essential for maintaining accurate records and complying with tax laws. This includes taking care of invoices, monitoring payments, and issuing 1099-NEC forms to the appropriate contractors.
Remember to keep these records for at least three years if the IRS requests them for an audit. If you manage your documents properly, you can have peace of mind in knowing your business is well-prepared.
5. Use 1099 Payroll Software
Using a 1099 payroll software can help you save time and avoid making any mistakes when it comes to paying your contractors and managing documents. Using a payroll comes with plenty of benefits such as automating employee pay, maintaining records for things like time and attendance, protection of employee payroll data, preventing paycheck error, etc.
There are tons of payroll software out there but there’s only one LÜK 😉
We developed an efficient way to handle independent contractor payroll for anyone working in the entertainment industry. LÜK gets it. Working in the entertainment industry is hard enough. Managing a production, running a photo shoot, or a fashion show, the last thing on your mind is financing and taxes. This is why we took the time to create this one-of-a-kind payroll system catered to visionaries like you 🙂
Our complete solution correctly classifies freelancers, takes care of worker’s compensation and payroll taxes, and pays talent from different modeling agencies and casting agencies with only one invoice. Through LÜK, talent receives their entire paycheck with the full understanding of how much and when they will be paid. Alternatively, they can use FlashPay, which allows for an expedited payment process for a small fee.
By using LÜK to pay talent, you’ll have a secure system for bringing together and monitoring all your 1099 talent. When tax season comes around, log into your platform and get the necessary information. All the important data is saved, arranged, and ready to go.
More About 1099 Payroll
What is a 1099-nec?
The 1099-NEC is a non-employee compensation form used to report earnings from independent contractor jobs, or self-employment income. This form includes the names, addresses, and tax identification numbers of both the payer and recipient and the total nonemployee compensation paid during the year.
Can you pay a 1099 employee hourly?
In most cases, independent contractors are mostly paid hourly instead of in one lump sum. You can also pay a 1099 employee in cash. You can pay employees and contractors in any way both parties agree on. This could be hourly, weekly, biweekly, monthly, daily, or even on the job as long as the employees receive payment.
What is the best 1099 payroll software?
For producers working with talent for photoshoots and fashion shows, LÜK is your diamond in the rough.
LÜK Network specializes in providing entertainment payroll services customized to the distinctive needs of the entertainment industry. Our easy-to-use platform allows for simple tracking and management of payroll for independent contractors in the cast and crew. With our comprehensive solution, freelancers are classified correctly, workers’ compensation and payroll taxes are managed, and talent from multiple talent agencies is paid with one invoice.
Streamline Your 1099 Payroll Process
Managing payments to independent contractors can take time and effort. Using payroll software can save you time and effort and help prevent human error, protect any important data about employees, and accurately calculate each paycheck fast. You won’t have to worry about doing extensive math or stress about all the documents you need to maintain for tax season, and payroll software does all that for you.
If you’re working in the entertainment industry and need help with paying talent and getting ready for tax season, consider LÜK.
LÜK makes it easier by providing a one-stop shop for all your contractor payroll needs. We’ll handle billing and compliance for you, so you can rest easy at night knowing your talent is getting paid the right amount on time.
But that’s not all! We’re also an all-in-one talent-booking platform that gives you access to the best and most diverse talent. In other words, we’re here to be your industry expert, personal booking specialist, and accounting department’s new best friend – all in one easy-to-use platform.
Save time while paying your talent on time.