Sadie operates her own industrial cleaning business. She occasionally hires her neighbor Glen, who operates a waste disposal business, to work with her. Sadie is unsure how to report the money she pays to Glen. Sadie paid Glen $3,500 during the year. What should Sadie do?

Sadie can pay him under the table so that he does not have to claim it as income.

Sadie is required to file a Form 1099-NEC, Nonemployee Compensation, for the services performed by Glen.

Sadie must submit a Form W-2 to Glen and pay employment taxes.

Sadie will only need to claim the payment as an expense on her Schedule C (Form 1040).