Does an LLC Get a 1099 During Tax Time?│2026 Updated Answer
Whether your LLC needs to send or receive a 1099 depends on how it's taxed and how much it paid — not simply whether it's an LLC.
After reviewing IRS guidance and consulting with tax professionals across more than 9 years of small business consulting, I've helped dozens of LLC owners answer this exact question. Here's what you need to know.
Quick Summary
- LLCs taxed as sole proprietors, partnerships, or ignored entities often must send or receive 1099-NECs, while those taxed as C or S corps usually don’t, with some exceptions [1].
- When filing FORM 1099-NEC, you must provide all the correct details of those receiving the form from the company.
- IRS data shows most partnership returns are from LLCs, and because many are taxed in pass‑through ways, a lot of LLCs end up dealing with 1099‑NEC forms [2].
- I always remind my clients that filing the 1099-NEC Form ensures compliance with IRS regulations regarding the reporting of non-employee compensation.
LLCs vs. 1099 Forms
LLCs and 1099 forms serve distinct purposes in business and tax reporting.
An LLC is a business structure that provides limited liability protection to its owners while offering flexibility in management and taxation.
On the other hand, 1099 forms, such as the 1099-NEC and 1099-MISC, are tax documents used to report various types of income to the IRS, including income received or paid by LLCs, depending on their role as either recipient or payer.
While LLCs can receive income reported on 1099 forms, they may also issue 1099 forms to report payments made to contractors, freelancers, or service providers.
What is a 1099-NEC Form?
The 1099-NEC Form is a specific type of 1099 form used to report payments made to nonemployees including independent contractors, subcontractors, or vendors [3].
NEC stands for "Non-Employee Compensation," emphasizing its focus on income earned outside of traditional employment arrangements.
This form is crucial for tax reporting purposes, both for the payer and the recipient, ensuring that the IRS accurately tracks income outside of the traditional employment arrangements.
According to IRS guidelines, an LLC taxed as a disregarded entity or partnership must receive or issue a 1099-NEC whenever payments for services reach the reporting threshold — a rule that applies to the majority of LLCs operating in the US by default [4].
For our company, we also used the 1099-NEC Form to report payments made for services not performed in the United States.
"LLCs should anticipate receiving a 1099-NEC for payments of $600 or more through the 2025 tax year; beginning in 2026, the reporting threshold rises to $2,000."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
Do LLCs Need 1099-NEC Forms?
LLCs typically need to issue 1099-NEC forms to report payments of $600 or more made to non-employee service providers, such as independent contractors or freelancers, for services rendered in the course of their trade or business.
This requirement applies to LLCs classified as sole proprietorships, partnerships, or disregarded entities for tax purposes.
However, if the LLC is taxed as a corporation (C corporation or S corporation), it generally does not need to issue 1099-NEC forms for payments made to non-employee service providers.
LLCS need to maintain accurate records of payments made to contractors and other service providers throughout the tax year to ensure compliance with IRS reporting requirements.
Failure to issue required 1099-NEC forms could result in penalties imposed by the IRS.
How Do I File a 1099-NEC?
To file a 1099-NEC, you need to gather the required information and use it to fill out the form where appropriate.
File a 1099-NEC by obtaining recipient info, completing the form, sending Copy A to the IRS, and providing copies to recipients.
In our case, we also included personal details about each nonemployee who received a Form NEC from our company.
We also provided personal details about all partners in our business, as well as personal bank account information for each payee.
Once you have all of this information, you can file a Form NEC by following these steps:
- Fill out Part I of the Form, which will include personal details about each recipient and payer
- Enter total payments made to nonemployees in Part II
- Report any income tax withheld on Part III
- Complete the remaining parts of the Form and submit it to your state's Department of Revenue
After you've submitted the Form NEC, be sure to keep a copy on file in case you need it later.
For our company, we sent a copy to each recipient so they could use it when filing their personal tax returns.
FAQs
Can I Use 1099-MISC Instead of NEC?
Using 1099-MISC instead of NEC is not often recommended. 1099-MISC is mostly used for certain payments, such as contract work, while NEC is used more broadly.
How to Calculate Taxable Income?
To calculate the tax income, you need to follow certain steps, such as determining the adjusted gross income (AGI), and specific tax credits that are subtracted from the AGI. The resulting amount is taxable income.
Is an LLC Required to Send Out 1099 Forms?
Yes, an LLC must issue a Form 1099-NEC for payments of $600 or more made to non-employee service providers during the 2025 tax year. Starting January 1, 2026, that threshold increases to $2,000. LLCs taxed as C or S corporations are generally exempt from this requirement.
References:
- https://www.irs.gov/instructions/i1099mec
- https://www.irs.gov/pub/irs-pdf/p1136.pdf
- https://www.irs.gov/pub/irs-pdf/f1099nec.pdf
- https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies
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