You must send a 1099 to an LLC only if the LLC is structured as a sole proprietorship or partnership for tax purposes

The IRS does not care what legal form a business takes — it cares how the business chooses to be taxed. An LLC can elect to be taxed as a sole proprietorship, a partnership, an S corporation, or a C corporation. You send a 1099 only to LLCs taxed as sole proprietorships or partnerships. If an LLC has elected to be taxed as a corporation, you do not send a 1099; you send a W-2 if the owner is an employee, or you do not issue any form if the LLC is a vendor paid for services or goods.

The owner of the LLC will have told you — or their accountant will have — which tax structure they use. If you are unsure, ask before year-end. Sending the wrong form costs both of you time with the IRS.

Key Takeaways

  • An LLC taxed as a sole proprietorship or partnership receives a 1099 from you if you paid them over $600 in a calendar year for services or non-employee work.
  • An LLC taxed as a C or S corporation does not receive a 1099 for vendor payments; those are not reported on a 1099 at all.
  • The LLC's tax election is separate from its legal structure, so you cannot tell by the name or registration whether to send a 1099.
  • Ask the LLC owner or their tax preparer which form they use for federal taxes before December 31 of the year you paid them.
  • The 1099 threshold is $600 per calendar year for most types of payments, though some categories have different minimums.

How an LLC chooses its tax structure

When an LLC is formed, it is a legal entity — a shell. The owner then tells the IRS how that shell will be taxed by filing Form 8832 (Entity Classification Election) or by making a default election. A single-member LLC defaults to being taxed as a sole proprietorship unless the owner files Form 8832 to elect corporate taxation. A multi-member LLC defaults to partnership taxation unless the members file Form 8832 to elect corporate taxation.

This choice is made once, usually when the LLC is created, but it can be changed. The owner's accountant makes this decision based on the owner's income, liability exposure, and business structure. You have no way to know which election an LLC has made just by looking at it.

The LLC itself does not file a 1099. The owner of the LLC receives it. If the LLC is a sole proprietorship, the owner's Social Security number goes on the 1099. If it is a partnership, the LLC's EIN goes on the 1099, and the partnership files a Form 1065 to split the income among partners.

When to send a 1099-NEC or 1099-MISC to an LLC

You send a 1099-NEC (Nonemployee Compensation) to an LLC taxed as a sole proprietorship or partnership if you paid them $600 or more in a calendar year for services. This includes contract work, consulting, repairs, professional services, or any work where the LLC was not your employee.

You send a 1099-MISC (Miscellaneous Income) for certain other payments — rent paid to an LLC, royalties, or prizes — depending on the category. The threshold for 1099-MISC varies by category; rent is $600, but some categories have no minimum.

The payment must be for business purposes. Reimbursements for expenses, payments for goods sold (unless the LLC is a vendor you report on 1099-NEC for services), and payments to corporations do not go on a 1099.

When you do not send a 1099 to an LLC

If the LLC has elected to be taxed as a C corporation or S corporation, you do not send a 1099 for payments to the LLC for services or goods. Corporations are not reported on 1099 forms. If the LLC owner is your employee and the LLC is taxed as a corporation, you send a W-2 to the owner, not a 1099 to the LLC.

You also do not send a 1099 if the total paid to the LLC in the calendar year is under $600. The threshold applies to the calendar year, not the contract or invoice — add up all payments to that LLC from January 1 through December 31.

If you paid the LLC for goods only (not services), and the LLC is not a vendor you are reporting income from, you typically do not send a 1099. The rules for goods are narrower than for services.

How to find out which tax structure an LLC uses

Contact the LLC owner or their accountant and ask: "Is your LLC taxed as a sole proprietorship, partnership, S corporation, or C corporation?" Write down the answer. You need this information by December 31 of the year you paid them, because you must file 1099s by January 31 of the following year.

If the owner does not respond or is unsure, ask for their EIN and the name of their tax preparer. The tax preparer can confirm the election in minutes. Do not guess — sending the wrong form creates a mismatch between what you report and what the owner reports to the IRS, and both of you will hear about it.

Keep a record of which tax structure each vendor uses. This saves time in future years and protects you if the IRS questions your reporting.

What happens if you send a 1099 to an LLC taxed as a corporation

If you send a 1099 to an LLC that is taxed as a corporation, the IRS will see a mismatch. The LLC owner will not report that 1099 income on their personal return because they filed a corporate tax return instead. The IRS computer will flag the discrepancy and may send notices to both you and the LLC owner.

The LLC owner can file an amended return or send a letter to the IRS explaining the error, but this takes time and creates a record. It is easier to send the correct form the first time. If you discover the error before January 31, you can file a corrected 1099 (Form 1099-X).

Reporting an LLC on your own tax return

If you are self-employed and paid an LLC for services, you report that payment on your Schedule C (Profit or Loss from Business) under expenses, not as a 1099 receipt. The 1099 you send to the LLC is separate from how you record the expense on your own return.

If you are a business owner deducting the payment as a business expense, keep the invoice and any 1099 you receive from the LLC for your records. The 1099 you send to the LLC does not affect your deduction.

Frequently Asked Questions

Can I ask an LLC for a W-9 to confirm their tax status?

Yes. A W-9 (Request for Taxpayer Identification Number and Certification) asks the LLC to provide their EIN and confirm they are not subject to backup withholding. It does not explicitly state their tax election, but it confirms their legal structure and EIN. Ask for a W-9 if you plan to pay the LLC regularly; it is the standard form for this purpose.

What if an LLC gives me conflicting information about their tax status?

Ask for written confirmation from their accountant or tax preparer. If the LLC owner is unsure, their accountant can provide a letter or email stating the tax election. Document this in your records. If you still cannot confirm, contact a tax professional before filing your 1099s.

Do I need to send a 1099 if I paid an LLC under $600?

No. The $600 threshold applies to most 1099-NEC and 1099-MISC payments. If the total paid to an LLC in the calendar year is under $600, you do not send a 1099. However, keep records of all payments in case the amount changes or you miscalculated.

What if an LLC is owned by a corporation or another business entity?

The ownership structure does not change your reporting. You still send a 1099 to the LLC if it is taxed as a sole proprietorship or partnership, using the LLC's EIN. The fact that the LLC is owned by another entity does not affect whether you send a 1099.

Can an LLC change its tax status mid-year?

An LLC can change its tax election, but the change usually takes effect on January 1 of the following year unless the IRS grants a late election. If an LLC changed its status during the year you paid them, ask which status applied during the months you made payments. Report based on the status that was in effect when you paid them.