Contractor Bookkeeping for 1099s: W-9s, Payment Records and Year-End Totals

Who counts as a contractor on a flip or a rental?

People and businesses you pay for services who are not your employees: subcontractors, trades, cleaners, handymen and some professionals. Corporations are generally excluded, with exceptions. Your CPA confirms the final list.

The records keep that question easy to answer. Each W-9 shows the tax classification the contractor chose, such as individual, LLC or corporation. Your CPA reads it from the W-9 when confirming who gets a 1099.

The IRS sets out who is covered on its page on reporting payments to independent contractors.

When should you collect a W-9, and what happens if you do not?

Before the first payment. A contractor with an unpaid invoice answers quickly; one who finished 6 months ago often does not answer at all. Without the W-9 you lack the taxpayer details a 1099 needs.

The W-9 is the IRS form where a contractor gives you their name, tax classification and taxpayer identification number. Ask for it with the first invoice. Save it to your shared folder, and it is on file for the whole year.

We flag any contractor paid without a W-9 on file. The flag goes on the monthly list of items we need from you, so it comes up during the year, while the contractor is still working for you. In the sample report, Demo Framing Crew is that contractor.

What has to be tracked on each contractor during the year?

Per contractor: the W-9 on file, every payment with date, amount and method, and the property each payment belongs to. The running total per contractor is what January needs.

• The W-9: on file or missing.
• Every payment: date, amount and method.
• The property each payment belongs to.
• The LLC that made the payment.
• The running total for each contractor, year to date.

Below is the year-to-date contractor table for Demo Flips LLC. Every name and number is invented data. One row carries the missing-W-9 flag.

Demo Flips LLC, year to date at the September 2026 close.

This table is part of the month-end summary in every monthly report, so the January totals build up all year. You can see it in place in our real estate bookkeeping report example, explained line by line.

Whether a total is reportable depends on the threshold the IRS sets for that tax year. Your CPA applies it to these totals.

Each payment also carries its property. In the sample, the $1,240 payment to Sample Plumbing LLC on Sep 21, 2026 is booked to Project 8, 1500 Sample Pl, Folsom. Coding every cost to its property is the same work as job cost accounting for house flips.

Does the payment method change anything?

Yes. Payments by card or through certain third-party platforms are reported by the processor instead, so they are excluded from what you report. Payments by check, cash or bank transfer are yours to report.

The rule is in the IRS Instructions for Forms 1099-MISC and 1099-NEC for tax year 2026, under Form 1099-K. The records keep the method on every payment. A contractor paid partly by card and partly by check shows both, line by line. Your CPA decides how each payment is treated.

What if the same contractor works across several of your LLCs?

Each entity reports what it paid. One contractor working across 3 of your LLCs can be below the reporting point in each and well above it in total, which is why the records are kept per entity.

Each LLC is a separate payer, so each LLC's books keep their own contractor totals. A contractor who works for 2 of your LLCs appears in both sets of books, each with its own total. Your CPA decides what each entity reports.

Keeping those totals apart starts with separate books, which is how we handle bookkeeping for multiple LLCs.

What does a 1099-ready package contain?

Per entity: every contractor paid, the total paid, the taxpayer details from their W-9, and a flag on anyone missing one. You or your CPA file from it. We prepare the figures; we do not file.

• One list for each LLC that paid contractors.
• Each contractor's name and taxpayer details, from their W-9.
• The total paid to each contractor in the tax year.
• A flag on any contractor with no W-9 on file.

Flipper Bookkeeping delivers this as 1099-ready reporting. You or your CPA file the 1099s from it.

Contractor totals are one of the things you need in January. The year-end bookkeeping checklist lists the rest.