Does anyone really know the answer to the question. Do you need to send a 1099 to a LLC? I have read alot of information on this and it seems to be split. Some claim it depends on the tax filing of the LLC some claim it does not matter and you need to send the 1099 to and LLC because it is not a corporaton. It may have elected to be taxed as a corporation but it is an LLC.
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It is a difficult situation - An LLC can elect to be treated as a sole proprietor, a partnership or a Corp
Of course you know law firms usually have to be issued a 1099 form.
I always find having the vendor in question complete the W-9 form provides needed information.
However, when in doubt - issue the 1099 MISC form as there is no penalty for completing. The fine or penalty for NOT issuing one is of course a bigger "hazard".
I usually just have all of my small business accounts obtain a W-9 regardless, then info is on file to determine later.
Found this "slide" presentation - which does not say all or exceptions, but it something you can just follow as a guideline - again forgetting the "LLC" as you need to know the entity selection they made i.e. sole prop, partnership or corp.
A 1099 is an IRS reporting form to report payments to IC’s and othersIt is required if your business pays $600 or more:
•To an independent contractor
•To an attorney who is not your employee (even if they are incorporated)
•To an individual / sole proprietor
•To a partnership
•To an estate
Sandy -
What I have is an estate(form 1041) that paid a law firm to settle some issues. Checks were not paid to individual attorney. Does the estate issue 1099 to the law firm? Since the estate is on a fiscal year spanning across 2 cal years, if a 1099 IS required does it(1099) use year actually paid or year for which 1041 is being filed?Comment
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Estates issue 1099MISC's just as any other entity if the reporting requirements are met. Even churches issue them, and they do not have to file an income tax return. Yes, you issue the 1099MISC to the firm, if that is how the check is made out. The estate reports its income and expenses on a fiscal year, if elected, but the person or entity to whom the 1099 is issued reports the receipt of the income on its normal basis, which is usually a calendar year. (Unless it is to another estate which elects a fiscal year.) That is not the issuing entity's concern. The election is made on the other end. So you use the 1099MISC for the year in which the expense is paid.Comment
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Proper way to handle 1099 for LLC
Give the LLC a W-9. They check the box and then list how they are taxed. If they are taxed as a corporation you do not need to (but still can) issue them a 1099. Keep the W-9 on file for future years or in the event of an IRS audit.I would put a favorite quote in here, but it would get me banned from the board.Comment
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Since LLCs are not recognized by the feds, I'd assume that whatever type of entity the LLC is being taxed as would determine if a 1099 needs to be sent out.Comment
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