📋 Subcontractor Compliance · California
Subcontractor 1099 Requirements in California — Complete Contractor Guide
If you hire subcontractors on your California job sites, you have specific IRS and California FTB 1099 reporting obligations. Here’s exactly what you need to do — and when.
📞 Get Help: (818) 679-4451The California Contractor’s 1099 Obligation
Any California contractor — whether General (B), Roofing (C-39), Electrical (C-10), Plumbing (C-36), HVAC (C-20), or any other CSLB license — who pays a subcontractor $600 or more in a calendar year must file IRS Form 1099-NEC and report those payments to the California Franchise Tax Board.
This applies to cash payments, checks, and ACH transfers. It does not apply to payments made to corporations (Inc. or Corp.) — but it DOES apply to sole proprietors, LLCs, and partnerships regardless of how they’re paid.
Step 1: Collect a W-9 Before Every Payment
The W-9 form is the foundation of your 1099 compliance. Before you pay any subcontractor a single dollar, have them complete and sign a W-9. This document gives you their legal name, business name, address, taxpayer ID number (SSN or EIN), and entity type.
⚠️ Pro Tip: Make W-9 Collection Non-Negotiable
Add a line to your subcontractor agreement: “W-9 required before first payment.” If a sub refuses to provide a W-9, you’re required by law to withhold 24% backup withholding from their payments and remit it to the IRS.
Who Gets a 1099? — California Subcontractor Rules
| Subcontractor Type | 1099 Required? |
|---|---|
| Sole Proprietor / Individual | ✓ Yes — if paid $600+ |
| Single-Member LLC | ✓ Yes — treated as sole proprietor |
| Multi-Member LLC / Partnership | ✓ Yes — if paid $600+ |
| S-Corporation | ✗ No — corporations exempt |
| C-Corporation | ✗ No — corporations exempt |
California FTB 1099 Requirements
California requires businesses to file copies of 1099 forms with the Franchise Tax Board (FTB) as well as the IRS. California participates in the IRS Combined Federal/State Filing program, which means if you e-file your 1099s with the IRS, California automatically receives a copy. If you paper-file, you must also submit to the FTB separately.
Frequently Asked Questions
What if I forgot to collect a W-9 and already paid the subcontractor?
Contact the sub and request a W-9 immediately. You can still file the 1099 on time even without a W-9 if you know their information, but legally you should have it on file. Going forward, make W-9 collection your policy before any first payment.
Do I need to file 1099s for material purchases?
No — 1099-NEC is for services only. If you pay a supplier for lumber, pipe, equipment, or other materials, no 1099 is required. The $600 threshold applies only to payments for services rendered.
Can Bookkeeping Champs handle all my 1099 filings?
Yes — 1099 preparation, filing with the IRS, and California FTB reporting is included in our bookkeeping service plans. We track all your subcontractor payments throughout the year and file everything on time every January.
Need 1099 Help for Your California Contracting Business?
Bookkeeping Champs handles all 1099 and W-9 compliance for CSLB contractors across Los Angeles, Ventura County, and the San Fernando Valley.
📞 Call (818) 679-4451Bookkeeping Champs · Se Habla Español · Los Angeles · Ventura County