If you have your own business, and you don’t have a corporation, you probably either have an LLC or have considered forming one.
While forming an LLC can give a more professional appearance to your business as well as perhaps provide some legal protection — ask a lawyer about this! — forming an LLC in and of itself generally doesn’t give you any tax benefits.
In general, you’ll still report your income and expenses the same way on Schedule C — unless, of course, you elected for your LLC to be taxed as an S corporation or a C corporation (we’ll get into that later).
And your LLC could very well get a 1099 — even though it (probably) shouldn’t. Confused? I’ll explain.
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Do LLCs Get 1099s?
Yes, LLCs get 1099s. There is nothing in the tax code that says LLCs, specifically, are exempt from 1099 reporting, and many payers issue 1099s to LLCs whether they are required or not.
But here’s the kicker: LLCs should only get 1099s if they’re taxed as a partnership.
What?! Yes, it’s true. Hear me out.
For federal income tax purposes, an LLC can be classified in the following ways:
- Disregarded Entity: classification for LLCs that have only one owner and that have not elected to be taxed as a corporation
- S Corporation: classification for LLCs that have no more than 100 owners and that have elected to be taxed as an S corporation
- C Corporation: classification for LLCs that have any number of owners and that have elected to be taxed as a C corporation
- Partnership: classification for LLCs that have more than one owner and that have not elected to be taxed as a corporation
So for the rest of the article I’m going to go through, one by one, whether each one of these LLC classifications should receive a 1099. But first, here’s a tidy little table summarizing what you need to know about if an LLC should get a 1099.
| 1099? | Ownership | Tax Classification |
|---|---|---|
| No | Multi-Member | S Corporation |
| No | Multi-Member | C Corporation |
| Yes | Multi-Member | Partnership |
| No | Single-Member | S Corporation |
| No | Single-Member | C Corporation |
| No (technically should be issued to LLC's owner) | Single-Member | Disregarded Entity |
Does a Disregarded Entity LLC Get a 1099?
Disregarded entity LLCs should not get a 1099 — in a perfect world.
Don’t believe me?
Check out Part I of the Form W-9 below — this is the form that independent contractors (the people who get a Form 1099-NEC) should complete and send to whomever they’re working for so that whoever they’re working for has the information they need to 1) determine if the recipient should be issued a 1099 at all and, if so, 2) the information they need to complete the Form 1099.
Note what is asked for in the green section on line 1 — the recipient’s name as shown on their income tax return.
And do you know what disregarded entities don’t file? Income tax returns.
What you should not put on Line 1 is the name of your disregarded entity — in fact, the Form W-9 explicitly tells you to put your disregarded entity’s name on line 2 and only on line 2.
And you should not put your disregarded entity’s EIN on the Form W-9. Check out the orange highlight — “The TIN [taxpayer identification number] provided must match the name given on line 1.”
Putting this all together, this means that you must put your actual name on line 1, and the TIN indicated on the Form W-9 — and therefore the individual or business who will be issued the 1099 — must be that of the individual or business indicated on line 1, which should not be the disregarded entity.
Of course, for practical purposes, millions of disregarded entity LLCs get 1099s every year.
But technically, those 1099s should have been issued to the LLC’s owner.
Does an S Corp LLC Get a 1099?
No, an LLC S corp should not get a 1099 because entities taxed as corporations should not be issued 1099s.
Related: Can My S Corp Pay Me Rent?
Does a C Corp LLC Get a 1099?
No, an LLC C corp should not get a 1099 because entities taxed as corporations should not be issued 1099s.
Does a Partnership LLC Get a 1099?
Yes, a partnership LLC should get a 1099 if it received income at or over the filing threshold.
Should I Put My LLC on My W-9?
Yes, you should put your LLC on your W-9. However, if it is a disregarded entity, put its name on line 2 but otherwise complete the Form W-9 as though your LLC did not exist.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
