Most small contractors run on subs: the electrician, the plumber, the tile setter, the framing crew that invoices as a company. Each is a 1099 subcontractor if they're genuinely in business for themselves, controlling how the work is done, carrying their own tools and insurance and working for other clients. Payments to them are a direct job cost with no payroll tax, and at year end each one who was paid $600 or more gets a 1099-NEC, which means collecting a W-9 before the first check.
A worked number
A framing crew paid $18,500 across the year as a sub costs $18,500. The same crew as employees at the same take-home costs about $24,000 once employer taxes, workers' comp and insurance are added. The difference is real, and so is the risk: a state audit that reclassifies the crew as employees bills the back taxes and penalties to you.
The mistake it hides
Missing W-9s and missing payment records. January is when contractors discover they paid a sub $11,000 in cash across six jobs with no address on file. The fix is upstream: W-9 and certificate of insurance before the first payment, and every payment recorded on the job it belonged to.
In Obra
Record each sub as a vendor, each payment as a cost on its project with the invoice attached, and the year's total per vendor is an export away when the 1099s are due. The QuickBooks guide covers how the accountant files from it.