The day you're too busy to do everything yourself is a good day, but it comes with paperwork. When you bring on a weekend market helper, a delivery driver, or a second set of hands in the kitchen and pay them as an independent contractor, the IRS has a short list of forms and rules you're expected to follow. Get it right and it's genuinely simple. Get the worker-classification part wrong and you can owe back taxes and penalties. This checklist walks through exactly what paperwork you need to hire your first 1099 contractor, in plain language, with the current-year rules that most articles online still get wrong.
The short version: To hire a 1099 contractor, first make sure they're really a contractor and not an employee under the IRS test, because misclassifying an employee as a contractor is the expensive mistake. Then collect a Form W-9 before you pay them, keep a simple written agreement, and track what you pay. If you pay one contractor $2,000 or more in 2026, you file a Form 1099-NEC by January 31 of the next year and send them a copy. As a sole proprietor you can use your SSN and don't need an EIN just to pay a contractor. Keep your records for at least four years. That's the whole job.
This checklist covers classification first, then the W-9, the 1099-NEC and its new threshold, EIN questions, payment apps, and recordkeeping.
Before any paperwork, answer this one question, because it decides everything else: is the person you're paying actually an independent contractor, or are they legally an employee? Misclassifying an employee as a 1099 contractor is the single costliest mistake a small food business makes here, since it can trigger back employment taxes and penalties.
The IRS uses a common-law test built on three categories of evidence, and no single factor decides it. You weigh the whole relationship. The IRS's guidance on classifying workers breaks it into:
Here's the honest part for a food vendor: a helper who shows up every Saturday, works only for you, uses your equipment, and does hours you set is probably an employee, not a contractor, no matter what you both call it. A true contractor looks more like a baker who fills a big holiday order on their own schedule with their own kitchen, or a driver who runs deliveries for several businesses. There's no magic number of factors that flips it. If you're genuinely unsure, you can file Form SS-8 and the IRS will make the determination for you, and the guide on hiring help versus staying solo walks through the financial side of the decision before you commit either way.
Get this call right first. Everything below assumes you've concluded the person is a real contractor.
For a genuine 1099 contractor, the paperwork is short: a W-9, a simple written agreement, a payment record, and a 1099-NEC if you cross the dollar threshold. That's it. There's no payroll setup, no tax withholding, and no benefits paperwork the way there is with an employee.
Here's the full checklist in order:
Each of these takes minutes, not hours. The rest of this guide explains the four that have real rules attached.
Collect a Form W-9 from your contractor before you make the first payment, because it gives you the exact legal name and taxpayer ID number you'll need later to file their 1099. Chasing it down in January, after the work is done and the person has moved on, is how vendors end up unable to file correctly.
The W-9 is simple:
The one crisp takeaway: the W-9 is the contractor's information for your records, and getting it up front is the difference between a five-minute filing and a January headache.
A written agreement for a 1099 contractor should be short and cover four things: the work, the pay, the tax responsibility, and the contractor status itself. You don't need a lawyer to draft a one-page agreement for a market helper or a delivery driver, and having one protects both of you if there's ever a disagreement about what was owed.
At a minimum, put these in writing:
Keep a signed copy in that contractor's file. A short, clear agreement beats a handshake every time, and the sample kitchen-help contractor agreement gives you a template you can adapt in a few minutes.
You have to file a Form 1099-NEC when you pay a single independent contractor $2,000 or more for their services during 2026 or later. This threshold changed, and it's the fact most online guides still get wrong.
Here's what actually happened and what it means:
| Tax year of payment | 1099-NEC filing threshold |
|---|---|
| 2025 and earlier | $600 or more |
| 2026 and later | $2,000 or more |
The threshold rose from $600 to $2,000 starting with 2026 payments, per the current IRS instructions for Form 1099-NEC. So if you pay a market helper $1,500 across all of 2026, you are not required to issue them a 1099-NEC, where under the old rule you would have been. Pay them $2,000 or more and you must file.
The rules that didn't change:
One extractable rule to remember: for 2026 forward, the 1099-NEC line is $2,000 per contractor for the year, and January 31 is the deadline whether you file one form or ten.
No, you don't need an Employer Identification Number just to pay an independent contractor. As a sole proprietor with no W-2 employees, you can use your Social Security number on the forms. An EIN becomes required when you hire actual employees.
That said, many vendors get an EIN anyway for one practical reason: privacy. Putting an EIN instead of your SSN on forms that go to contractors and other businesses keeps your personal number off more paperwork. An EIN is free from the IRS and takes a few minutes to request online. The guide on getting an EIN as a sole proprietor food vendor covers whether it's worth doing for your situation.
So the rule of thumb: EIN not required to pay a contractor, required to hire an employee, and often worth getting anyway to protect your SSN.
If you pay a contractor through a payment app or card processor, the reporting can shift to the app, but don't assume it covers you. Third-party payment platforms issue their own form, the 1099-K, on a different threshold than your 1099-NEC.
The distinction that trips people up:
The safe practice: keep your own record of everything you pay each contractor no matter how you pay them, because your filing obligation is based on what you paid, not on whether an app happened to generate a form. When in doubt on an edge case, a quick check with a tax pro beats a guess.
Keep the W-9, your written agreement, your payment log, and copies of any 1099s you file for at least four years. The IRS guidance on recordkeeping sets employment-tax records at a minimum of four years, and there's no downside to keeping a tidy folder longer.
A minimal contractor file per person contains:
Keep it as digital scans or a labeled folder, one per contractor. The crisp standard: four years minimum, one file per person, and you'll never sweat an IRS question about who you paid.
You're hiring help because you have more orders than one person can handle, and that's exactly the problem worth solving cleanly. Homegrown is a $10-per-month online storefront, with no percentage fees beyond standard payment processing, where every order comes in as a clear, itemized record. When you bring on a helper, they can pack straight from the order dashboard instead of deciphering a pile of Instagram DMs and texts, which is where handoff mistakes come from.
That order trail does double duty here. It gives you clean documentation of what you sold and shipped, the kind of records a growing operation needs when it starts paying for help and filing forms. Compare that to running orders through DMs, where nothing is itemized and nothing is searchable, or a cash-and-carry table where there's no record at all. A card reader like Square takes the payment but doesn't organize the orders your helper needs to fill.
To be clear about what Homegrown does not do: it is not payroll or accounting software, it won't file your 1099-NEC, and it won't track what you pay your contractor. Your W-9 folder and payment log still do that job. What it does is turn the order chaos that made you hire help in the first place into a system a second person can actually step into. If you're at the point of hiring, set up your Homegrown storefront so the orders your new helper handles are organized from the start.
For 2026 payments and later, no. The 1099-NEC filing threshold is $2,000 per contractor for the year, so if you paid one person less than that, you're not required to issue the form. The one exception is if you withheld federal income tax from their pay, in which case you file regardless of amount. Note that the old $600 threshold still applied to 2025 payments.
The W-9 is what your contractor gives you before you pay them, containing their name and taxpayer ID, and you keep it in your files. The 1099-NEC is what you send to the contractor and file with the IRS after the year ends, reporting how much you paid them. In short, the W-9 comes in at the start and the 1099 goes out at the end.
You can pay in cash, but paying cash does not remove your obligations. You still have to determine whether they're a contractor or an employee, and if they're a contractor you paid $2,000 or more, you still owe them a 1099-NEC. Cash with no records is how vendors get into trouble, so log every cash payment the same as any other.
Apply the IRS test: if you control their hours and methods, they work only for you, and the role is ongoing and central to your business, they're likely an employee. A regular weekly helper you schedule and direct usually leans employee. If it's genuinely unclear, you can file Form SS-8 and let the IRS decide rather than guess.
No. A sole proprietor with no employees can use their SSN to pay and file for a contractor. An EIN is only required once you hire actual W-2 employees, though many vendors get a free EIN anyway to keep their SSN off paperwork that goes to other people.
January 31 of the year after you made the payments. You must both file it with the IRS and give the contractor their copy by that date. If January 31 falls on a weekend or holiday, the deadline moves to the next business day.
Hiring your first contractor is a sign your food business is working, and the paperwork is far lighter than most people fear once you take it in order. Nail the classification call, collect the W-9 up front, and keep a clean file, and you're done. When you're ready to make the orders themselves easy to hand off, start your Homegrown storefront so your new help can pack from a real system instead of a phone full of messages.
