1099 Process Step-By-Step Our goal is to make the process of 1099 preparation as simple and efficient for you as possible. To achieve that, we have outlined the steps for you on this checklist and flow chart, listed guidelines for determining what types of vendors should be issued a 1099 and provided a substitute W-9 that is easily personalized for your use.  Employee or Contract Laborer?  This link takes you to the IRS documents designed to help with this judgement call: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html   Please review the IRS' definition of Casual Labor by using this link: http://www.irs.gov/businesses/small/article/0,,id=101033,00.html This document clearly explains how to determine whether a worker is due a W-2 or a 1099 from you.  Additionally, it has links to more detailed IRS publications that address the same issue in greater detail.   1099 Steps for Processing Review this checklist and determine which actions need to be taken.   1099 Process Flow Chart The steps that need to be taken are laid out visually, allowing for the differences in handling that are dependent upon specific criteria. Guidelines for Issuing 1099s A summary guide to the most common recipients of 1099 forms and which of those forms are appropriate for them.  Substitute_W9.pdf (Substitute_W9.doc) A W-9 form that can be used instead of the government-issued form for gathering required vendor information.  This 1-page form explains very clearly how to fill it out and where to return it. Sample Letter to Vendor Sample wording of a cover letter that you can enclose with a W-9 form, explaining the reason for your request.