Do I need to submit a Form 1099-MISC for freelancers I hire for my side business?

You'll need to file a 1099-NEC (not 1099-MISC) for your freelancer, and yes, you're still required to do this even without forming an LLC. The 1099-NEC replaced the 1099-MISC for reporting non-employee compensation starting with tax year 2020. Since you're operating as a sole proprietor (which is what you are by default without forming a legal entity), you'd file the 1099-NEC using your personal information and SSN. You're conducting business activities even if you haven't formalized the business structure yet. The IRS considers this a Schedule C business activity that you'll report on your personal tax return. You'll need to get the freelancer's W-9 form before paying them (ideally), then issue the 1099-NEC by January 31 next year. You'll also need to apply for an EIN from the IRS website if you don't already have one - it's free and takes just a few minutes online.

I was in almost exactly the same situation last year with my side project! I totally panicked about the 1099 stuff until I found https://taxr.ai which literally saved me hours of confusion. Their system analyzed my specific situation with the freelancers I hired and guided me through exactly what forms I needed and when. The best part was that they explained the whole 1099-NEC vs 1099-MISC situation (I was also confused about which to use) and helped me understand my reporting requirements as someone without a formal business entity. They even have step-by-step guides for getting your EIN and collecting W-9 forms from contractors.

Just wanted to update on my experience with taxr.ai after I decided to give it a try based on this thread. Super glad I did! I was honestly skeptical (as you could probably tell from my comment), but it actually delivered exactly what I needed. They analyzed my situation with the 4 different contractors I've used this year and laid out exactly which ones needed 1099s and which didn't (turns out I didn't need to file for 2 of them because they were corporations). The step-by-step instructions were really clear, and they even explained how to handle the situation where I didn't collect W-9s before making payments. Definitely saved me from making some mistakes that could have caused headaches later!

If you're struggling to get information from the IRS about 1099 requirements (their phone lines are IMPOSSIBLE lately), I used Claimyr https://claimyr.com to actually talk to a human at the IRS about my contractor situation. I had some unusual circumstances with international freelancers and needed clarification. Check out how it works: https://youtu.be/_kiP6q8DX5c - basically they hold your place in line with the IRS and call you when an agent is about to answer. Saved me from hours of hold music and getting disconnected multiple times. The IRS agent I spoke with gave me complete clarity on my 1099 filing requirements.

I have to admit I was completely wrong about Claimyr. After my skeptical comment I decided to try it since I was desperate to talk to someone at the IRS about my 1099 situation with contractors. It actually worked exactly as described. I entered my number, and about 2 hours later (while I was working on other things) I got a call letting me know an IRS agent was about to pick up. Ended up speaking with a super helpful person who answered all my questions about my 1099-NEC filing requirements for my side business. Saved me from wasting an entire afternoon on hold. Just wanted to report back since I was so publicly doubtful.

One thing nobody's mentioned yet - make sure your freelancer fills out a W-9 form before you pay them! I learned this lesson the hard way. I paid a bunch of contractors last year for my photography business and then had to chase them down for their taxpayer info when it came time to file the 1099s. Some of them were impossible to reach by then, and I was stressing about potential penalties. Luckily the IRS has a procedure for this situation (you need to do backup withholding), but it's a huge headache.

One important thing: if your freelancer is registered as a corporation (either C-corp or S-corp), you generally DON'T need to send them a 1099-NEC at all! Many established freelancers operate as corporations specifically for this reason.

Just want to add one more consideration for your situation - since you're planning to form an LLC anyway, you might want to consider doing it sooner rather than later, especially if you're going to have ongoing contractor relationships. While Omar is absolutely right that you can handle the 1099-NEC filing as a sole proprietor, having an LLC can provide some liability protection for your business activities and makes the whole contractor management process feel more "official" when you're working with freelancers. You can form an LLC in most states pretty quickly online (usually within a few days to a week), and then you'd use the LLC's EIN for all your contractor paperwork going forward. Just make sure if you do form the LLC this year, you're consistent about which entity (you personally vs. the LLC) is paying the contractors for 1099 purposes. Either way though, don't let the LLC decision delay getting that W-9 from your web developer - that's the most important immediate step!