Do LLCs Have to File a 1099?

By Salvatore Jackson

One of the major benefits to organizing as a limited liability company, or LLC, is the advantage of pass-through entity federal taxation. LLC profits are only taxed by the IRS once, on the tax returns of individual LLC members. However, the advantage of pass-through entity federal taxation does not exempt an LLC from the IRS's stringent reporting requirements, and an LLC must use IRS Form 1099 if it pays income to individuals other than wages, salaries and tips.

Independent Contractors

LLCs are often required to use IRS Form 1099 if they employ independent contractors. According to the IRS, an independent contractor is an individual who performs work for a company that only has the right to direct the result of the work, not the method by which the work is accomplished. For instance, an electrician who is paid a flat fee by a construction company to wire an apartment complex is an independent contractor.

Using a 1099 Form

The LLC does not directly fill out Form 1099. Instead, it distributes Form 1099 to any qualifying individuals who fill out the form and send it back to the LLC. The LLC then files each Form 1099 with the IRS, and the independent contractor uses Form 1099 to fill out his own tax return. The LLC must file electronically if it has to file more than 250 Form 1099 reports.

Ready to start your LLC? Start an LLC Online Now


The IRS has over 20 different types of Form 1099s. Income that must reported on Form 1099 includes the acquisition of secured property as collateral, proceeds from the cancellation of LLC debt, payments received from the government, advances on health insurance payments, income derived from interest, proceeds from real estate transactions and gambling winnings.

Form 1096

If the LLC has to file fewer than 250 Form 1099 forms, it does not need to file electronically. Instead, the LLC combines all of the filled out Form 1099 forms and submits Form 1096 with the IRS. Form 1096 summarizes all of the various filled out 1099 forms. Additionally, nonprofit organizations must fill out a Form 1096.

Ready to start your LLC? Start an LLC Online Now
How to File Taxes for an LLC Company


Related articles

What Is an LLC 1065 Filer?

Though a business may select to be an LLC under state law, the federal government does not allow a business to file federal income taxes as an LLC. A business may choose to file federal income taxes as either a partnership or as a corporation. When a business files taxes as a partnership, it must send Form 1065, called Return of U.S. Partnership Income, to the IRS to report its earnings.

What Forms Do I Need to File for an S Corp?

An incorporated business is automatically designated by the Internal Revenue Service as a C corporation for income tax purposes. However, certain smaller corporations can elect to be taxed as S corporations without forfeiting the liability protections that the corporate structure affords to shareholders. Making the initial election requires filing an IRS form. Once S corporation status is granted, the tax forms the corporation must file annually will change.

Does the Trustee Have Control of Money Made After Filing?

When you file for bankruptcy, a trustee is assigned to your case. The trustee oversees the process and ensures compliance from the time you file the petition to the final discharge. In a Chapter 7 bankruptcy, the trustee will seize any income earned up to the date you filed your bankruptcy petition and use it to pay your creditors. In Chapter 13, the trustee will instead take your disposable income every month and pay your creditors over a three-to-five-year period.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

Do I Need to Pay Taxes if I Do Not Make Revenue As a Sole Proprietor?

Sole proprietors carry on business in their own names, without partners or shareholders -- it's the simplest form of ...

How to Fill Out a W-9 for a Non-Profit Corp

The Internal Revenue Service expects taxpayers to report all income earned every year. Instead of relying on taxpayers ...

Do I Owe a Penalty if I Don't File a Pennsylvania Corporation Tax Return?

Pennsylvania levies a corporate income tax on certain firms doing business in the state. At the time of publication, ...

LLC Pass Through Taxation

Corporate entities are frequently subject to double taxation, which means that money earned is taxed at two different ...

Browse by category
Ready to Begin? GET STARTED