Companies that need to report compensation paid to independent contractors generally follow these steps:
Obtain a copy of Form 1099-NEC from the IRS or a payroll service provider
Provide the name and address of both the payer and the recipient 3. Calculate the total compensation paid
Note the amount of taxes withheld if backup withholding applied
Send copies of the form to the IRS and the independent contractor by January 31 of the following tax year