Have a question with freight hauling. Freight broker pays factoring companies as well as the trucking companies/carriers themselves. In the scenario where the freight broker pays the factoring company, it is because the factoring company already paid the carrier (factoring took over the receivables). My question is:
1. Do you just issue a 1099 to the carriers? Or it has to be to whomever you actually paid?
2. I assume the factoring company issues a 1099 as well to the carrier for paying them?
*3. I noticed in the 1099-MISC instructions, if it is freight related you do not have to file a 1099 to subcontracted trucking companies. It's pretty broad, has anyone had experience in this industry itself?
The vendors or contractors will only receive the 1099-MISC once they reach the threshold amount in a calendar year. Hence, you're required to give your carries a 1099-MISC if you paid them more than $600 in a calendar year.
These links will help you understand more about 1099s: (Note: Though these are articles for QuickBooks Online, they provide the same explanation for the 1099-MISC)
I'd also recommend seeking a professional advice from your accountant. They can help you determine whether the carriers need to receive the 1099s or not. They are the best person for this kind of concerns.