I know, no one likes 1099's, but they are a necessary evil of doing business.  If you own a business, you are required to send form 1099-MISC to any vendor you pay for services.  The only exceptions are Corporations, unless they are lawyers, then they get one anyway.  Lots of complicated rules, but I will give you the basics here and you can read the IRS instructions if you need more detail at 1099-MISC Instructions.

In general, if you pay someone more than $600 for SERVICES, you are required to give them a 1099.  The forms are due to the recipient (the person you paid) by Feb. 2, 2009, and to the IRS by Mar. 1, 2009.  You should have each person you paid fill out a form W-9.  I highly recommend that when you hire someone for a job, you have them fill out the form BEFORE you issue them a check, people tend to disappear and then it is difficult to issue their 1099. 

The consequence, if you don't issue 1099's, is that the IRS can disallow all of those related deductions you took if you get audited.  I think, it's just not worth the risk.

If you use QuickBooks, it is very easy to set up vendor tracking for 1099's, then just buy the blank forms and print them directly from QB.  You will also need to print a 1096, the transmittal form to the IRS.  Please note: You must use the original red ink forms, you cannot use copies or downloaded forms.

If you have any questions on this, please feel free to post them here as a comment or e-mail me directly at teresa@winning-edge.net.