January might feel like it’s still a long way off.
But if you’re responsible for sending 1099s for your business, October is actually one of the best times to start preparing.
Why?
Because some of the federal 1099 reporting rules changed for 2026—including a significant increase to the reporting threshold for certain business payments.
And the last thing you want is to discover in January that you’re missing W-9s, contractor information, or accurate payment records.
Whether you own a law firm or operate one or more franchise restaurants, now is the time to make sure your bookkeeping is ready.
The $600 Threshold Changed for Many Business Payments
One of the biggest changes for 2026 is the increase in the federal reporting threshold for certain information returns.
For payments made in 2026, the threshold for many payments that previously triggered reporting at $600 increased to $2,000.
For example, businesses generally need to file Form 1099-NEC for someone who isn’t an employee when reportable payments for services reach at least $2,000 during 2026.
Certain payments reported on Form 1099-MISC, including rents and some other types of business payments, also moved to the $2,000 threshold.
Beginning after 2026, that $2,000 amount is scheduled to be adjusted for inflation.
Sounds simpler, right?
Potentially—but don’t make the mistake of assuming that every 1099 reporting threshold is now $2,000.
It isn’t.
Different payments and forms can still have different reporting requirements.
Attorneys Have an Important Exception to Understand
Here’s one reason the details matter.
For 2026, attorneys’ fees paid in the course of a trade or business generally fall under the new $2,000 Form 1099-NEC threshold.
But gross proceeds paid to attorneys are different.
Certain gross proceeds paid to an attorney in connection with legal services—such as payments associated with a settlement—can still be reportable on Form 1099-MISC when they total $600 or more.
That’s an important distinction for law firms.
And it demonstrates why businesses shouldn’t simply hear “$2,000 is the new 1099 threshold” and apply that rule to every transaction.
The type of payment matters.
Form 1099-K Has Its Own Rules
Another area that has created plenty of confusion over the last several years is Form 1099-K.
Under the current federal rules, a third-party settlement organization generally has a Form 1099-K reporting requirement when payments for goods or services exceed $20,000 AND there are more than 200 transactions during the calendar year.
But there’s another important point:
Not receiving a 1099-K doesn’t mean the income isn’t taxable.
Businesses are still responsible for reporting taxable business income even when they don’t receive an information return for it.
And a payment platform may sometimes issue a Form 1099-K even when you’re below the federal TPSO reporting threshold.
That’s why your bookkeeping records—not the forms that happen to arrive in January—should be the primary source for understanding your business income.
Why This Matters for Law Firms
Law firms can have a surprisingly complicated mix of reportable payments.
Depending on the practice, you may pay:
- Contract attorneys
- Expert witnesses
- Investigators
- Consultants
- Marketing professionals
- Freelancers
- Other outside service providers
You may also receive or handle payments associated with settlements, legal fees, and other transactions that require careful bookkeeping and tax reporting.
October is a good time to review your vendor list and ask:
Do we have a completed W-9 for every contractor or vendor who may require reporting?
Don’t wait until January to start chasing people for taxpayer identification numbers and legal business names.
It’s much easier to correct missing information while you’re still actively working with the vendor.
Why Franchise Restaurant Owners Should Pay Attention
Franchise restaurant owners face a different challenge:
volume.
A restaurant may work with dozens of vendors and service providers throughout the year.
That might include:
- Repair and maintenance contractors
- Cleaning companies
- Marketing providers
- Consultants
- Technology vendors
- Local service providers
- Independent contractors
Add multiple locations, delivery platforms, merchant processors, and various payment methods, and year-end reconciliation can become complicated quickly.
Even though the new $2,000 threshold may mean fewer vendors require certain 1099s, your underlying records still need to be accurate.
You need to know who was paid, how much they were paid, what the payment was for, and how it was paid.
Start With Your W-9s
One of the easiest ways to make January less stressful is to review W-9 documentation now.
For vendors and contractors who may be subject to information reporting, make sure you have the appropriate information on file, including:
✔ Legal name
✔ Business name when applicable
✔ Federal tax classification
✔ Address
✔ Taxpayer identification number
Don’t assume you’ll remember who needs a form later.
Create a process for collecting the appropriate documentation when a vendor or contractor is onboarded—not months after they’ve already been paid.
Reconcile How Vendors Were Paid
Here’s another detail that can cause confusion.
How a vendor was paid can affect reporting responsibilities.
Payments made directly by check, ACH, cash, or certain other methods may be treated differently for information-reporting purposes than payments processed through credit card networks or third-party payment networks.
Payment settlement entities may have their own Form 1099-K reporting responsibilities.
That’s why your bookkeeping should clearly identify payment methods instead of simply lumping every vendor payment together.
Before year-end, review your contractor and vendor payments and make sure you can distinguish who was paid, how they were paid, and what the payment was for.
Reconcile Your Own Payment Platforms, Too
This matters on the income side as well.
If your law firm or franchise restaurant receives money through credit cards, payment apps, online platforms, or merchant processors, don’t wait for a 1099-K to tell you how much revenue you earned.
Reconcile those accounts throughout the year.
Remember that a Form 1099-K generally reports gross payment amounts, which may not match the net amount deposited into your bank after fees, refunds, or other adjustments.
Your books should properly account for those differences.
Otherwise, January can turn into a frustrating exercise of trying to understand why your 1099-K doesn’t match your bank deposits.
Your October 1099 Readiness Checklist
You don’t have to prepare every 1099 right now.
But you can make January much easier by doing a little housekeeping in October.
Review:
✔ Your contractor and vendor list
✔ Year-to-date payment totals
✔ W-9s on file
✔ Missing taxpayer information
✔ Vendor payment methods
✔ Contractor classifications
✔ Merchant processor accounts
✔ Third-party payment platforms
✔ Income reconciliations
✔ Any unusual attorney or settlement-related payments
If something doesn’t look right, you still have time to investigate and correct it.
Don’t Let a Higher Threshold Create Sloppier Bookkeeping
The increase from $600 to $2,000 for certain payments may reduce the number of information returns some businesses need to issue.
But it doesn’t reduce the importance of good bookkeeping.
You still need accurate vendor records.
You still need to properly categorize expenses.
You still need to reconcile your accounts.
And you still need accurate records of business income—whether or not a 1099 is issued.
Think of the new threshold as a reporting-rule change, not permission to pay less attention to your books.
The Bottom Line
The 2026 1099 rules have changed, and the new $2,000 threshold is good news for many businesses.
But 1099 compliance isn’t as simple as applying one number to every payment.
Law firms need to pay particular attention to the distinction between attorney fees and certain gross proceeds paid to attorneys.
Franchise restaurant owners need systems that can handle larger volumes of vendors, contractors, payment platforms, and transactions.
And every business needs clean records before January arrives.
October is the time to find the missing W-9—not January 30.
Is Your Bookkeeping Ready for 1099 Season?
If your vendor records are scattered, your W-9s are incomplete, or you’re not confident your books accurately reflect contractor payments and payment-platform income, now is the time to clean things up.
Contact us today to schedule a year-end bookkeeping review.
We can help you organize your records, identify missing information, reconcile your accounts, and get your bookkeeping ready for year-end and the upcoming 1099 filing season.
A little preparation now can save you a lot of scrambling in January.