Double-counting income problem. It's very possible the service provider issues your business a 1099-NEC for $1,000, while the credit card company, PayPal or Venmo also issues your business a 1099-K for $1,000. Now the IRS could think you have $2,000 in income versus $1,000.
What you can do: Accurately recording your income (and expenses) as they occur throughout the year will make it easier to identify situations where you receive a 1099-NEC and a 1099-K for the same income. By having an accurate income figure, you can then navigate the 1099 reporting accurately.
Receiving cash that isn't taxable. It is easy to get 1099-Ks you don't expect if a person using a service like Venmo does not account for the transaction correctly. This often happens when splitting bills at restaurants or someone casually repays you.
What you can do: Whenever you exchange money with friends in a digital format like Venmo, have them mark the transaction as personal. Each application will handle this differently, but it is critical you do this to avoid getting a 1099-K error. Another idea is to have separate bank accounts for business and personal transactions.
Blending personal and business transactions. If you use digital payment systems to pay bills, separating business from personal transactions is now more important than ever.
What you can do: Keep separate accounts for your business activities. The IRS is quick to disallow expenses in blended accounts and is equally quick to assume all incoming funds are sales. Your best defense is separation.
While many are complaining about the complexity created by 1099-Ks, it looks like they are here to stay. And remember, whether you receive a 1099-K or not, if you have business activity you are required to report it. Thankfully, with a little planning and a professional on your side, it is hassle that can be managed.