If your business pays an LLC more than $600 a year for rent, business services or independent contractors, you’ll need to issue a federal form 1099 to report those payments to the Internal Revenue Service. Here’s what’s required.
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updated September 1, 2023 · 3min read
Every business owner must report income and expenses on federal income tax forms. In addition to its regular tax returns, your business may have to issue and file federal 1099 forms to report payments your business has made to limited liability companies, partnerships and individuals that are not your employees.
A 1099 Form is a federal income tax form. Businesses are required to file a 1099 form with the Internal Revenue Service to report certain types of payments, such as rents, payments to independent contractors, and royalties. Generally, your business does not have to file a 1099 form for payments to corporations, but it may need to file 1099 forms for payments to individuals, partnerships and limited liability companies.
There are several types of 1099 forms:
There are several instances where a business must issue a 1099-MISC if it has made payments to a limited liability company. The most common ones include:
Tax form 1099 and instructions for filling out the form are available at no cost on the Internal Revenue Service website, www.irs.gov.
In addition, several commercial software providers offer 1099 forms, and paper forms are available at office supply stores and public libraries.
You must fill out a separate 1099 form at the beginning of each calendar year for each individual, partnership, or LLC that you paid in the previous year. Once you’ve filled out the forms, you must provide each of the listed individuals or entities with a copy of the form or a substitute form with all the same information.
The exact requirements for providing a 1099 to an LLC recipient vary somewhat depending on the type of 1099 form. A paper copy of the 1099-MISC typically must be sent to the recipient by the beginning of February. You can also issue a 1099 to an LLC electronically. For specific requirements, see the IRS guidelines for informational returns.
The 1099 must also be filed with the IRS. Filing deadlines are at the beginning of March for paper forms and the end of March for forms that are filed electronically.
If your business pays an LLC more than $600 a year for rent or services, you’ll need to issue a 1099 Form to the LLC and file it with the Internal Revenue Service. Issuing a 1099 isn’t difficult, but it’s an important part of your business’s accounting and tax preparation plan.
by Jane Haskins, Esq.
Jane Haskins is a freelance writer who practiced law for 20 years. Jane has litigated a wide variety of business disp...
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