I run a small US-based LLC and am working with a client (another US-based LLC) who is about contract & pay our company around $300,000 for a software development project.

The company we're working with is leaning on us to us to handle compliance, we are not sure whether we need to advise them to provide a 1099-MISC for their payment.

Do they need to provide a 1099-MISC for payment of that size?



If you’re trying to figure out if your contractor’s LLC gets a 1099 form or not, ask your contractors to fill out an IRS Form W-9, “Request for Taxpayer Identification Number and Certification.” This is a standard step in getting ready for tax time. On this form, your contractors have to check a box showing how their business is set up for tax purposes: individual/sole proprietor, C Corporation, S Corporation, Partnership or LLC. If the contractor does business as an LLC, they must also check a box on the Form W-9 to show whether the LLC is taxed as a corporation or partnership. If the box is checked to show that the LLC is taxed as a corporation (C Corporation or S Corporation), then you do not have to file a 1099 for that contractor.

However, if the LLC is taxed as a partnership or is a single-member LLC (disregarded entity), the contractor needs to receive a 1099 form and you need to file a 1099 for this contractor.

The simple rule of thumb is: if the LLC files as a corporation, then no 1099 is required. But for all other contractors who are set up as LLCs (but not filing as corporations), your business will need to file 1099 forms for them.

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