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Filing taxes with the Internal Revenue Service can be a headache for business owners and their accountants. Like most tax topics, the rules around when an LLC needs to file a 1099 form for payments made to others and when it doesn’t can be complicated. Making a mistake on your taxes can cost you valuable time and money.
The MarketWatch Guides team created this resource to help business owners like you understand your LLC’s 1099 requirements. We’ve included information about what 1099 forms are, how they work, when they’re required and how to file them. You’ll also learn about a few options for professional tax assistance from LLC service providers and more.
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What is a 1099?
A 1099 is a series of federal tax forms used to document payments your LLC makes to people who aren’t employees or co-owners and entities that aren’t incorporated. The IRS uses these forms to ensure businesses and their service providers are reporting expenses and income accurately.
1099 Requirements for LLCs
Rules around when a business needs to file a 1099 can be complex. Filing requirements depend largely on the payment recipient’s tax status and the amount paid to the recipient during the year.
Recipient’s Tax Status
You’re generally required to file 1099 forms for reportable payments made to anyone who isn’t an owner or employee of your LLC. You also don’t need to file 1099 forms for payments made to corporations, including LLCs taxed as S corporations.
So, if you pay a sole proprietorship, partnership or another LLC that has not elected C corporation or S corporation tax status, you may need to file 1099 paperwork. Knowing your vendor’s tax status is critical to complying with these filing requirements.
When you begin working with a vendor that you intend to pay at least $600, the IRS requires you to ask for an IRS Form W-9, Request for Taxpayer Identification Number and Certification, which will provide the information you need to determine whether payments to that vendor may trigger a 1099 filing requirement.
Businesses that don’t obtain a payee’s taxpayer identification number (typically through a W-9) are required to withhold 24% of payments made to the vendor and submit it to the IRS (known as backup withholding). You may also be notified by the IRS or the payee that backup withholding is required for some other reason.
Payment Amount
Another factor that determines your 1099 filing responsibilities is how much money you pay out to a single party during the year. The 1099 filing requirement is triggered for payments to a single party totaling at least $600 in a calendar year.
Let’s say you pay $400 to an electrician to wire an outlet in your new office in January and have no other transactions with the electrician for the rest of the year. Because the payment didn’t reach the $600 threshold, you do not need to file a 1099 for that vendor. However, if you paid the same electrician another $500 to come back to install new lighting in September, you would need to file 1099 forms because you crossed the $600 threshold.
Exemptions from 1099 Requirement
Payments made to corporations are generally exempt from 1099 filing requirements. Businesses that are structured as corporations for tax purposes are under strict reporting rules that require them to document anything that a 1099 would cover, making these forms somewhat redundant.
Absent any exception (such as backup withholding, medical payments and substitute payments), you aren’t required to send a 1099 for payments made to:
- S corporations (including LLCs that elect S corporation status)
- C corporations (including LLCs that elect C corporation status)
If you’re ever unsure whether the business entity you’re paying is exempt from 1099 filing, refer to their W-9. The form contains the information needed to determine whether a 1099 is necessary, including the business’s tax status. Remember that there’s no penalty for filing a 1099 when it’s not required, but there are consequences for failing to file one when it is required.
1099 Tax Forms
There is no single 1099 tax form, but a series of forms. The specific 1099 you file depends on the nature of the payment you’re reporting. There are several forms in the 1099 series, but we will focus on two of the most common ones for LLCs: the 1099-NEC and 1099-MISC.
1099-NEC, Non-Employee Compensation
A 1099-NEC form is for payments made to non-employees who provide services to your business and attorneys. Most often, this form is used to report payments to independent contractors, including freelancers.
An independent contractor is a person or business that’s been hired to do work for a business, but isn’t an employee.
Form 1099-NEC reports the following information:
- Your business name, details and TIN
- The contractor’s name, address and TIN
- Amount you paid to the non-employee
- Amount you withheld for state or federal income taxes (if any)
1099-MISC, Miscellaneous Payments
Form 1099-MISC is used to report payments that don’t fit on Form 1099-NEC. Payments reportable on 1099-MISC include payouts for prize winnings, rent payments for company property and royalty payments to copyright holders. You also use 1099-MISC to report gross proceeds paid to attorneys (such as lawsuit settlement money).
Filing 1099 Forms for Your LLC
If you are required to file one or more 1099 forms for your LLC, you must do so by Jan. 31 following the tax year in which you made payments. So, if you pay a webmaster to build a website for your business in June 2025, you need to file a 1099-NEC form by Jan. 31, 2026.
You can file all of the 1099 forms for your LLC directly with the IRS by using the forms available on its website. You are also required to send a copy of the form to the payee. There are several tax software options out there to help you prepare these forms.
| Law in Action: Abe hired Bob to paint a mural for his storefront. Bob has his business structured as a single-member LLC, which is taxed as a sole proprietorship. Assuming Abe paid Bob at least $600 for the mural, Abe must file a 1099-NEC with the IRS. Abe must also send a completed copy of the 1099-NEC. This way, the IRS can match the amount reported on the 1099 to the income Bob reports on his personal tax return. |
Professional Tax Help for 1099s
Most accounting software solutions provide 1099 filing for a small fee (or sometimes, no fee). However, you may still want to hire a tax professional to ensure compliance with these complex rules. Tax preparers can help ensure all forms are filed correctly and, if nothing else, take a time-consuming task off of your hands.
You may also find affordable 1099 preparation help through a professional LLC formation company. Several providers, including Inc Authority, offer tax preparation services from in-house employees or through partnerships at discounted rates. This is an option especially worth considering if you’re already using a formation service to help you with other aspects of creating and running your LLC.
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
Frequently Asked Questions about 1099s for LLCs
If the LLC has elected to be treated as a C corporation or S corporation, then a 1099 may not be required. However, if the LLC is taxed as a sole proprietorship (also called a disregarded entity) or partnership, then a 1099 is required for payments of $600 or more in a single calendar year.
You can find out an LLC’s tax status by requesting a Form W-9.
LLCs need to send out 1099s for each party they paid at least $600 to non-employees during the tax year. Whether your business is required to send out 1099s doesn’t depend on the type of entity you have, but rather the type of entity those businesses have that your business dealt with.
Form 1099-NEC is mostly used to report compensation payments to independent contractors. Form 1099-MISC is used to report other types of payments, such as royalties and rent. For example, you’d use Form 1099-MISC to report rent payments for office space and Form 1099-NEC to report payments you made to a freelance writer you hired to create content for your company website.
Yes, partnerships are required to send 1099s to people who aren’t employees or owners and entities that aren’t corporations if the partnership paid them at least $600 during the year. The 1099s must also be filed with the IRS and state tax authorities.
If you fail to complete and file your required 1099s by the Jan. 31 deadline, you’ll be subject to penalties. For 1099s due in 2026, if you file within 30 days after the deadline, there will be a $60 penalty. If you file more than 30 days after the deadline but before Aug. 1, the fee will jump to $130. If you don’t file, or you file after Aug. 1, your fee will jump up to $340, and intentional disregard results in a $680 fee.
Legal Disclaimer: This article contains general legal information, but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
