Do I Have to Send a 1099 to an LLC? W-9, Thresholds, Exceptions

Whether you have to send a 1099 to an LLC depends on how that LLC is taxed by the IRS, not on the fact that it’s an LLC. If the LLC is taxed as a sole proprietorship (a disregarded single-member LLC) or as a partnership, you generally owe a 1099 once your payments cross the threshold. If the LLC has elected to be taxed as a C-Corporation or S-Corporation, you generally don’t, with attorney fees and medical payments as the important exceptions. For payments made in 2026, the reporting threshold for nonemployee compensation on Form 1099-NEC is $2,000, up from $600.¹

Why the LLC’s Federal Tax Classification Is the Whole Question

An LLC is a state-law structure. It says nothing about how the IRS treats the business. The same legal wrapper can house a sole proprietorship, a partnership, a C-Corp, or an S-Corp, and that federal classification is what drives your 1099 obligation.

Single-Member LLC (Disregarded Entity)

A single-member LLC that hasn’t elected corporate treatment is a “disregarded entity” for federal tax purposes.² The IRS treats the income as belonging directly to the owner. You issue the 1099 to the owner using their name and their SSN or individual EIN.

Multi-Member LLC (Partnership by Default)

An LLC with two or more members is taxed as a partnership unless it files Form 8832 to elect corporate treatment.³ Partnerships are not exempt. When you pay a partnership-taxed LLC at or above the threshold, you issue the 1099 to the LLC using its legal name and EIN.

LLC Taxed as a C-Corp or S-Corp

An LLC can elect C-Corp status with Form 8832 or S-Corp status with Form 2553.⁴ Once that election takes effect, the LLC is treated like any other corporation for information-reporting purposes, and the general 1099 exemption for corporations applies. A $10,000 payment to an LLC taxed as an S-Corp produces no 1099-NEC. The identical payment to an LLC taxed as a partnership does. Two exceptions still override the corporate exemption: payments to attorneys and payments for medical or healthcare services, both covered below.

The W-9 Is How You Actually Know

You cannot tell an LLC’s tax classification from its name, its state paperwork, or its invoice. The only reliable way is to collect a completed Form W-9 before you make the first payment. On Line 3a of the current W-9, the vendor identifies its federal tax classification; an LLC that isn’t disregarded checks the LLC box and writes “C,” “S,” or “P” for corporation, S-corporation, or partnership.⁵ A disregarded single-member LLC checks the box matching its owner (usually Individual/sole proprietor). C or S means no 1099 for ordinary services. P, or an individual owner behind a disregarded LLC, means track the payments and file when they cross the threshold.

Skipping the W-9 is expensive. When a vendor doesn’t provide a certified TIN, backup withholding kicks in at 24% of gross payments, and you’re the one responsible for withholding it and sending it to the IRS.⁶ Most vendors return a W-9 quickly once they hear that. You can also verify name-TIN combinations in advance using the IRS TIN Matching service.⁷

The $2,000 Threshold and Which Form Applies

For payments made after December 31, 2025, the 1099-NEC reporting threshold is $2,000 in cumulative payments to a single vendor during the calendar year.⁸ It’s the running total across all invoices, not any single payment. Most 1099-MISC categories also moved to $2,000, with one exception: royalties still trigger reporting at $10.¹ The $2,000 threshold will be adjusted for inflation annually starting in 2027.

The form depends on what you paid for. Services performed by a non-employee in the course of your business (consulting, design, bookkeeping, contract labor of any kind) go on Form 1099-NEC.⁹ Non-service payments go on Form 1099-MISC: rent for office space or equipment, royalties, prizes, and medical or healthcare payments are the common categories.¹⁰

Attorney and Medical Payments: Report Anyway

Two categories must be reported even when the LLC is taxed as a corporation.

Payments to attorneys for legal services go on Form 1099-NEC regardless of the firm’s structure. If the law firm is an LLC taxed as an S-Corp, you still file. Gross proceeds paid to an attorney in connection with legal services, such as a settlement payment, go in Box 10 of Form 1099-MISC instead.¹¹

Medical and healthcare payments of $2,000 or more paid in the course of your trade or business go in Box 6 of Form 1099-MISC. The corporate exemption does not apply to medical payments, including payments to professional corporations. The narrow carve-outs are payments to tax-exempt hospitals or government-owned facilities.¹²

Credit Card and Payment App Payments Don’t Get a 1099

If you paid the LLC with a credit card, debit card, or through a third-party payment network like PayPal, you do not report those payments on a 1099-NEC or 1099-MISC.¹³ The payment processor handles that reporting on Form 1099-K. Issuing your own 1099 on top of it would double-report the same income. The exclusion only covers card and third-party network payments; checks, ACH transfers, cash, and wire transfers remain your responsibility.

Foreign LLCs Sit Outside the 1099 System

The rules above apply to domestic LLCs. If the vendor is a foreign entity, the reporting shifts entirely: you request Form W-8BEN-E instead of a W-9,¹⁴ and payments are reported on Form 1042-S rather than a 1099.¹⁵ Default withholding is 30%, which a tax treaty may reduce if the entity provides a valid W-8BEN-E claiming the benefit. A foreign LLC with a single U.S. owner that is a disregarded entity can fall back to the owner’s status and the standard 1099 system.

Deadlines, E-Filing, and Penalties

Form 1099-NEC is due to both the IRS and the recipient by January 31 of the year following payment, with no extension for electronic filers.¹² Form 1099-MISC has a later IRS deadline (February 28 on paper, March 31 electronically), but the recipient copy is still due January 31.¹

If you file 10 or more information returns of any type in a year, you must file them electronically. The count combines all information returns, not each form type separately, so six 1099-NECs and four 1099-MISCs put you over the line.

Penalties apply per form and stack quickly. For returns due in 2026:¹⁶

Up to 30 days late: $60 per form
31 days late through August 1: $130 per form
After August 1 or not filed: $340 per form
Intentional disregard: $680 per form, no maximum cap

The penalty applies separately to the return filed with the IRS and to the payee statement, so one missed vendor can produce two penalties. Small businesses with average annual gross receipts of $5 million or less get reduced maximum caps, but the per-form amounts are unchanged. The best defense is the boring one: get a W-9 on file before you cut the first check, and keep it. A clean W-9 is your evidence that you correctly relied on the vendor’s own certification of its tax status.¹⁷

1
Internal Revenue Service. Publication 1099 – General Instructions for Certain Information Returns (2026)
2
Internal Revenue Service. Single Member Limited Liability Companies
3
Internal Revenue Service. LLC Filing as a Corporation or Partnership
4
Internal Revenue Service. About Form 8832, Entity Classification Election
5
Internal Revenue Service. Form W-9 (Rev. March 2024)
6
Internal Revenue Service. Backup Withholding
7
Internal Revenue Service. Taxpayer Identification Number (TIN) Matching
8
Internal Revenue Service. Form 1099 NEC and Independent Contractors
9
Internal Revenue Service. Reporting Payments to Independent Contractors
10
Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
11
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025)
12
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
13
Internal Revenue Service. IRC Section 6050W Frequently Asked Questions
14
Internal Revenue Service. Instructions for Form W-8BEN-E (10/2021)
15
Internal Revenue Service. Instructions for Form 1042-S
16
Internal Revenue Service. Information Return Penalties
17
Internal Revenue Service. How Long Should I Keep Records