I have a single-member LLC (disregarded entity, pass-through, not elected as S or C corporation). I hired a C Corporation for a temporary project and made several payments.

Question came to my mind as to how to report these payments as a business expense? Since IRS says there is no need to issue 1099-MISC or 1099-NEC to corporations. How do I prove that I made these payments and where to show it in tax return?

  • In a word - you just keep the invoice/receipt, and that is ultimately the proof.
    – Fattie
    Feb 10 at 21:34

It's the same as other business expenses. Schedule C Part II is all about expenses. Pick the appropriate categories, and if an expense doesn't fit one of the categories they provide put them in Part V (Other Expenses). Aggregate payments for like-types of expenses in the Other section if using it.

As for proving the expense, it's easiest if you have separate personal and business accounts, so that all business ins and outs hit one account. Regardless of whether or not you have separate accounts, it's important to keep good records of business income/expenses. Preserve invoices/bills/receipts and maintain a ledger that shows the same with dates paid/received.

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