 So we got the form 1099 miscellaneous. So this used to be the standard form for contractors and then they put another one out there for the contractors but this one's still a common youth form. So use form 1099 MISC miscellaneous information to report certain payments you make in your business. These payments include the following items. So rent payments of $600 or more other than rents paid to real estate agents. Then we've got prizes and awards of $600 or more that are not for services such as winning a TV or radio shows, royalty payments of $10 or more. It's pretty low threshold. Payments to certain crew members by owners of operators of fishing boats. Amounts paid for the purchase of fish for resale from any person engaged in the business of catching fish. So apparently I don't know much about the fishing industry but there's some special rules oftentimes with regards to fishing related practices for some reason. So you also use form 1099 miscellaneous to report your sales of $5,000 or more of consumer products to a person for resale anywhere other than in a permanent retail establishment. Then we've got the form 1099 NEC. This is probably the most common 1099 that most small businesses may be required to report information returns. Remember, we're not talking here about receiving the 1099. You might receive these 1099s as well. That means that someone else is reporting them to you. And let's just kind of recap the structure of this when would this happen. If you're receiving a 1099, that's because you're in a small business most likely where you did work for other businesses, right? You did work for another business as a contractor. You are not a business. You're not a corporation yourself. You're not like an S corporation or you're not incorporated. Therefore they were required to give you a 1099. And when you record your income, your income you would think would have to be equivalent or greater than the amount of the 1099s you received. Otherwise you would think the IRS would question your situation. That would be the general side on the receiving of the 1099s. Now if you do business and you don't do business and your customers are not another company, but you're like a hair salon or you're a restaurant or you're a massage parlor or something like that where you're doing business for the end customers, not another business, then it's likely you're not gonna receive the form 1099s from the customer because the IRS no longer has leverage over the payers because people that are getting their haircuts or buying a drink or something like that aren't required to give a 1099 to the bartender or to the person that owns the chair that has their own business or their massage table. So you're not gonna get a 1099 in that case. It doesn't mean you don't have to report the income, but it just means that you're not gonna have a 1099 and the IRS has less control over those industries, which is why I don't think they don't like those industries, but they would like to have more control over those industries, which is why they tried to shut them all down during COVID, I think, I don't know, I'm just kidding, but in any case. So then on the other side of things, if you hire someone as a small business, then you have the benefit of being able to deduct the contractor expenses. So you have to determine who did you pay. Now, if you paid like the phone company, like a big corporation or the utility company, then the IRS isn't concerned with you issuing a 1099 for Edison, giant Edison phone company. They have their own, they've got their hooks into Edison already. They don't need you telling them that you paid Edison, you know, $30 some dollar like $100. But if you're paying another contractor that isn't incorporated, then the IRS doesn't have their hooks into them as much and they want you to report anything over like $600 to make sure that other contractor is paying their fair share of the income tax. So that's how it generally is gonna work here. All right, so file form 1099 NEC, non-employee compensation for each person in the course of your business to whom you have paid at least $600 during the year in service performed by someone who is not your employee, including parts and materials. So notice if they're your employee, then you're still gonna be reporting on them. You're just gonna use the W2 form. Not only are you gonna be reporting on them, but you're required to withhold from them. And that opens up the other issue of if you're hiring someone as a small business, do you want to hire them as an employee? Do you want to hire them as a contractor? Do you want to take them on as some kind of equity partner taking a piece of the profit sharing? So the questions would be if they're an employee, you have less control, I mean, you have more control over them in that situation, but you have to deal with the W2 and the withholdings and all that kind of stuff. If they're a contractor, then you still have to issue them the 1099, but you don't have to deal with all the other kind of payroll stuff. Although you have less control over them in that situation, they're more likely to leave possibly or whatever comes up comes up. And then if you hire them as a partner or you take on a partner and give them an equity interest, you need to be careful on that because that could push you from reporting on the schedule C to having a partnership business. And obviously their decision making in the partnership is something you might be liable for within the partnership. So you want to be very careful of that because a lot of small businesses, you have one visionary that is kind of knows what to do within the business. And it actually works well from in a non-democratic system, right? With a little small, a small business often has like one person that knows the direction that they want to go in. And when you turn that into a committee with a bunch of people that have different directions, it becomes a problem. That doesn't mean that as things grow, things obviously change and the structure of the whole organization has to change because the specialties will change and whatnot, but you want to be careful when you're thinking about taking on a partner because you might have different ideas about what's going on with the partnership. Also, you got to be careful in terms of can someone qualify as a contractor or an employee? If you classify someone as a contractor, then the government's going to try to get them as an employee, because remember the government wants you to be their tax collector. So you want to make sure that if they're a contractor, they definitely qualify as a contractor, even if you were to be audited and questioned about that. Okay, so cash payments for fish or other aquatic life and purchase from anyone engaged in the trade or business of catching fish. So we've got that fish thing again going on here, special rules for fishermen. You got to know your taxes, Fisher people, because there's a lot of special rules for you guys. Payments to an attorney. Okay, so you must also file form 1099 NEC for each person from whom you have withheld any federal income tax reported on box four under the backup withholding rules regardless of the amount of the payment. So in other words, if they're an employee, you have to be the tax collector. The government's going to force you to make you be their tax collector. You withhold the money, you pay it to them for your employees. But if you have a contractor, typically the government's not going to force you to be their tax collector, but they still want you to rat out who you paid the money to with the form 1099, giving the IRS the social security number amount you paid them and their address, right? So they can go collect on their own. But if you can't give them that information, like you can't get the social security number, you can't get their address, their proper name or something like that, then the IRS wants you to withhold. They want you to withhold the money because you're not ratting out the person that you paid properly. And so they want you to make sure that you're the one that's withholding the money as if they're kind of like an employee so that they get paid that way.