Preparing 1099s for Your Group Therapy Practice: What Actually Happens Before You File
January arrives.
You know you have five contract clinicians, so you assume you have five 1099s to prepare. Simple enough, right?
Then you start looking.
There are a few other vendors in the books. One clinician changed business entities during the year. Someone's W-9 doesn't quite match what's in QuickBooks. A contractor was paid through more than one account. Another payment went through a credit card processor.
Suddenly, "we have five contractors" doesn't tell you nearly as much as you thought it did.
That's an uncomfortable place to be in the last week of January.
The forms are rarely the complicated part. The work happens before you ever get to a form.
I sometimes describe 1099 preparation as 90% verification and 10% filing. Before a 1099 can be filed accurately, someone has to determine who needs to be reviewed, gather the right information, verify what was actually paid, investigate anything that doesn't line up, and only then prepare and file the forms.
Here's what that process actually looks like.
The finished 1099 hides everything that happened before it
When you look at a completed 1099, it looks like almost nothing.
A name. An address. A taxpayer identification number. A dollar amount.
What you don't see is everything that had to happen to determine that those were the right pieces of information.
Before a 1099 can be filed accurately, you need to know who actually needs to be reviewed, what they were paid for, whether you have the right W-9, whether the information on that W-9 matches your bookkeeping records, how much you actually paid, and whether the way those payments were made affects how they should be reported.
So the process is really more like:
Identify → Collect → Verify → Resolve → File
The filing is the final step. The quality of the filing depends on everything that came before it.
1. Identify everyone who needs review
This is where a lot of practice owners start too narrowly. They think, "Who are my contractors?"
That's an understandable place to begin, since contract clinicians are the most obvious people who might receive a 1099. But contractors aren't necessarily the entire population you need to review.
Here's a pattern I see every January. Eight clinicians, three W-2 and five contract. Five possible 1099s, or so everyone assumed.
Then we went through the books and found a marketing consultant, plus three more payees nobody had ever thought of as vendors. So the real question stopped being "how do I file five 1099s" and became "which of these payments belong in the review at all?"
The starting point isn't always your contractor list. It's the broader picture of who your practice paid and what those payments were for. Not every payment will result in a 1099, but you have to identify the relevant ones before you can make that determination.
2. Collect the information you need to make the decision
Once you've identified the people and businesses to review, you need the information that lets you decide what happens next.
That's where Form W-9 comes in. A W-9 gives you the legal name, tax classification, and taxpayer identification number of the person or business you're paying, which is what year-end reporting runs on.
But don't fall into the trap of assuming "LLC" after a name answers the 1099 question.
One of your contract clinicians is Hannah Abbott. Your QuickBooks vendor list says Godric's Hollow Counseling LLC. The W-9 in your file says Hannah Abbott.
That's not necessarily a problem. It does need to be looked at.
Keeping W-9s and vendor records current throughout the year makes year-end much easier, because you're not reconstructing relationships months later from scattered transactions.
3. Verify what was actually paid
This is probably the most important part of the process. Who did you actually pay, how much, and by what method?
Back to Hannah. She got $1,500 through your normal contractor payment process. Then there's another $900 to her out of the operating account that nobody remembers.
Here's why that matters more than it looks.
For 2026, the reporting threshold for most 1099-NEC payments is $2,000, up from $600. Hannah's $1,500 doesn't hit it. Her $2,400 does. Look at only one workflow and you'll conclude she doesn't need a form at all.
The federal threshold also isn't the only one. Several states still require filing at $600, and the federal change didn't touch that. If your clinicians work in more than one state, that's worth a conversation with your tax professional before you decide someone falls below the line.
Records may need to be reviewed across accounts, platforms, and vendor files to capture the full year's activity. In a group practice that usually means more places than you'd expect. Some clinicians run through your payroll platform. Someone got paid by Zelle for the two months before they were set up in Gusto. A supervisor invoices you directly and gets paid through bill pay.
Payment method matters too. Payments made by card, or through a network that settles card transactions, generally aren't yours to report at all, because the processor reports them. What catches people is the other half. Zelle, ACH, and bill pay aren't in that category, and that's how a lot of practices actually pay their contractors.
So you can't always take a QuickBooks vendor total and assume it belongs on a 1099. Software can file the forms. Whether the information behind them is accurate is a different job.
4. Resolve the exceptions
This is where most of the work happens, because real bookkeeping rarely looks like the tutorial example.
In a perfect world, every W-9 exists, every vendor is entered once, every payment is categorized correctly, nobody changed entities, and nothing needs clarification.
Reality is messier. A contractor whose name changed. A W-9 that doesn't match QuickBooks. A clinician paid through two systems. A payment categorized wrong back in March that nobody caught.
None of that means something is terribly wrong. It means someone needs to stop, look, and resolve the question before filing.
Good 1099 preparation is noticing when something doesn't fit and figuring out why.
5. Then, finally, file the forms
After all of that, you reach the part everyone thinks of as "1099 preparation." Filing.
For Form 1099-NEC, the IRS generally requires filing with the IRS and furnishing the recipient copy by January 31, with the next business day applying when that date lands on a weekend or holiday. For 2026 payments, January 31, 2027 is a Sunday, so the date is February 1, 2027.
Filing is last. The form is the output. Everything above it is the work.
By the time you're ready to file, you should already know who belongs on your list, what information you have, what you actually paid, and whether anything needs to be resolved.
What determines whether your January is easy or miserable?
The difference between a clean year-end process and a January scramble is usually obvious.
A practice with clean vendor records, current W-9s, consistent bookkeeping, reconciled accounts, and traceable payments will have a quick 1099 process. A practice without those things may face a research project.
Group practices are busy. Vendors change, clinicians come and go, payments happen in different places. January is much easier when it isn't the first time anyone has looked closely at the records.
So, can QuickBooks prepare your 1099s?
It can help. But there's a difference between software generating a form and someone verifying that the form should exist, that the recipient information is correct, and that the amount reported is supported by your records.
If your books are clean and vendor information is accurate, software makes the final steps easier. If not, you have a bookkeeping problem before you have a 1099 problem.
The quality of your year-end reporting is determined months before year-end.
1099 preparation is really a verification exercise
The work is making sure the information behind those forms is correct.
That's more than "prepare five 1099s." But if you're a therapy practice owner with multiple clinicians, vendors, payment systems, and accounts, this process is exactly where good bookkeeping earns its keep.
When January comes, you already know your numbers are right.
Over the next several articles I'm going to open up the parts of that 90% that cause the most confusion for group practice owners. Why W-9s create so much of the work later. Why an LLC doesn't settle the question. And how books that look clean can still turn into a research project in January.
Getting Your 1099s Right Depends on What’s in Your Books. Can You Trust the Records You’re Working From?
Here's how to tell if something's off in your therapy practice finances, and what to look at before year-end makes those problems harder to ignore.
Read: "How to Tell if Something’s off in Your Practice Finances"
Don't Miss This Resource
3 Must-Follow Money Rules: Our Guide to Better Bookkeeping
Whether you do your own bookkeeping or work with a trusted team, these steps will make everything easier!
