Yes, a disregarded entity generally gets a 1099. If you pay a single-member LLC or other disregarded entity at least $600 for services during the year, you must issue Form 1099-NEC — but the form goes in the name and taxpayer identification number of the owner, not the LLC.1IRS. Am I required to file a Form 1099 or other information return?2IRS. Single Member Limited Liability Companies
The IRS treats a disregarded entity — most often a single-member LLC — as part of its owner for federal income tax purposes. The business is a separate legal entity under state law, but for income tax reporting the IRS looks through it to whoever owns it.2IRS. Single Member Limited Liability Companies That is why the 1099 has to name the owner.
How to Fill Out the 1099 for a Disregarded Entity
Get a Form W-9 from the contractor before you pay them. The W-9 tells you who the owner is and which taxpayer identification number to use. On the 1099-NEC:
- Put the owner’s legal name on the primary name line. You can include the LLC’s business name as well, but the owner’s name comes first.3IRS. Instructions for the Requester of Form W-9
- Use the owner’s taxpayer identification number. That is a Social Security Number or Individual Taxpayer Identification Number if the owner is an individual, or an EIN if the owner is itself an entity.3IRS. Instructions for the Requester of Form W-9
The $600 threshold applies to total payments for services during the year.1IRS. Am I required to file a Form 1099 or other information return?
What If the LLC Gave You Its Own EIN?
Many single-member LLCs have their own EIN. Owners get one to open a business bank account or to meet state licensing requirements, and the LLC is required to use its own name and EIN for employment taxes and certain excise taxes. None of that changes the 1099-NEC rule. For non-employee compensation, the owner must give you their own name and TIN on the W-9, because the IRS needs the income tied to whoever will file the income tax return that reports it.2IRS. Single Member Limited Liability Companies The LLC’s separate EIN generally does not belong on the 1099.
If a contractor hands you a W-9 with the LLC’s name and EIN and nothing else, ask for a corrected form.
When the LLC Is Not a Disregarded Entity
Not every LLC is disregarded, and the classification changes the answer.
A multi-member LLC is treated as a partnership for federal tax purposes by default, unless it elects otherwise. Partnerships are separate tax entities that file their own return on Form 1065.4IRS. LLC filing as a corporation or partnership Payments to a partnership still get a 1099-NEC at the $600 threshold, issued in the partnership’s name and EIN.
An LLC can also elect to be taxed as a C-corporation or S-corporation by filing Form 8832.5IRS. About Form 8832, Entity Classification Election Payments to corporations are generally exempt from 1099 reporting, with a few exceptions where a 1099 is still required:1IRS. Am I required to file a Form 1099 or other information return?
- Medical and health care services
- Legal services or attorney fees
- Payments made by federal executive agencies for services
The W-9 you collect will tell you which of these situations you are in. Box 3 of the form asks the payee to identify its federal tax classification, and that is the box that decides whether a 1099 is required and whose name goes on it.