Backstage provides a marketplace where companies and creators are able to purchase media and services from talent.
If you hire talent directly – outside of Backstage’s Stripe-powered payments platform – your company may need to file related tax paperwork, as you would when directly hiring any other employee, freelancer, or independent contractor, depending on the scenario. The rules may vary depending on the type of work, service, or goods provided; the level of pay; when the work was performed; and the locality.
For example, in the United States, in situations where a 1099 is needed, the IRS previously required that a 1099-MISC be issued, but in 2020 the requirement was changed to a 1099-NEC form for documenting contractor payments.
However, if you’re paying for goods or services via a third-party settlement organization rather than paying the freelancer directly, in most cases you will not need to file a 1099-NEC. Instead, you likely won’t need to worry about filing a 1099 at all, because the third-party settlement organization will be the party responsible for filling any required 1099’s. And, in fact, in this scenario a 1099-K form would be utilized, not a 1099-NEC contractor form.
Backstage’s Stripe-powered payments platform is a third-party settlement organization. So if you’re using Backstage’s on-site payment system powered by Stripe, the transaction is essentially treated as a third-party purchase rather than a direct employment agreement.
As such, in these scenarios the purchaser wouldn’t be responsible for any 1099-type documentation, the way they might be with a direct hire, and instead the settlement organization (in this case, Stripe, in conjunction with Backstage) would be filing a 1099-K for each individual service provider if and when they trigger the level of compensation and/or number of transactions necessary for eligibility.
(Previously, the threshold for triggering a 1099 was based upon a freelancer receiving $20,000 or more in earnings, or 200+ transactions, per platform on which they’re conducting their business. However, the IRS lowered this threshold to $600 in earnings starting in 2023.)
For example, if you were to purchase a product or service from a seller on a marketplace like Etsy or eBay, you would typically not file a 1099 for the work performed by the seller. Likewise, if you utilized a delivery service like DoorDash to have a freelancer bring food to your house or place of business, you would not be personally responsible for issuing the delivery driver a 1099.
Making a purchase through Backstage’s Stripe-powered marketplace is similar. Whether or not the seller/talent is eligible for a 1099 will be dependent on their total cumulative transaction history on Backstage for the year and the current tax laws in their area that determine eligibility; if eligible, the applicable 1099 forms will be filed with the talent and IRS, via Stripe, in full compliance with local laws.
However, these 1099s will be on behalf of Backstage, via Stripe, and not directly reflective of your business, as the 1099 will account for the seller/talent’s cumulative transactions on the platform, not specifically their work with your company. Again, since the transactions are accounted for as part of the seller’s marketplace activity, your company may not have any further obligations in regards to 1099s in these instances.
As independent contractors, sellers/talent may still be responsible for keeping track of their own earnings and accurately reporting them in tax filings, but this is typically not the responsibility of the buyer/employer within the scope of these types of marketplace transactions.
(And outside of the U.S., 1099 forms typically do not apply, but the tax authorities of each country may have other rules that buyers, sellers, employers, and contractors must follow.)
Stripe helps to ensure a high level of security and compliance. For more information on Stripe’s system for marketplace payments, visit:
For more information about 1099-K’s, see:
- Keeper: Everything You Need to Know About Form 1099-K
- Backstage: How the New 1099-K Tax Law Impacts Freelancers
To learn more about Backstage’s secure payments system, visit:
- Overview: How to manage Backstage payments
- How to Pay Talent Using Backstage Secure Payments
- How to Receive Secure Payments on the Backstage Platform
- FAQs Regarding Stripe Accounts for Talent / Payment Recipients
- Learn About Pay Transparency
DISCLOSURE: This communication is on behalf of Backstage, LLC or its affiliates (“Backstage”). This communication is for informational purposes only, and contains general information only. Backstage is not, by means of this communication, rendering legal, financial, accounting, business, tax, or other professional advice or services. This communication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your interests. You should consult a qualified professional advisor. Backstage does not assume any liability for reliance on the information provided herein.