Do LLCs Get a 1099? (2026): The Rules for Paying and Being Paid

Published: June 22, 2026

A Message from Slava

I'm Slava, founder of Jupid. Before this, I built Anna Money, where we worked with more than 60,000 small businesses and grew to $40M ARR. The question "do I send this LLC a 1099?" came up constantly — usually in late January, usually in a panic.

Here's the thing that trips everyone up: the answer has almost nothing to do with the word "LLC." An LLC is a legal wrapper a state gives you. The IRS doesn't tax LLCs at all. It taxes the thing inside the wrapper — a sole proprietor, a partnership, an S corporation, or a C corporation. That tax classification is what decides whether a 1099 is required, and a one-person design studio and a 40-person agency can both be "an LLC" while sitting on opposite sides of the rule.

So when someone asks "does an LLC get a 1099," the honest answer is: it depends on how that LLC is taxed, and you find that out from one piece of paper — the W-9. Collect the W-9, read one box, and the decision makes itself.

This guide covers both directions. If you pay contractors, you'll know exactly which LLCs you must send a 1099 to and which you can skip. If your own business is an LLC receiving payments, you'll know when a 1099 should show up in your mailbox and how to report the income either way. Every rule here is pulled from the current IRS instructions, and I'll flag the one big threshold change that takes effect for 2026 payments so you don't get caught using the wrong number.

Here's what we'll cover:

Why an LLC's tax classification — not its name — decides everything
When you must issue a 1099-NEC to an LLC (and when you don't)
The attorney and medical exceptions that override the rule
How to read a W-9 in ten seconds
What to do when your own LLC receives a 1099
The $600 vs. $2,000 threshold change and which year it applies to

Decision flow for whether to issue an LLC a 1099-NEC based on tax classification

The Short Answer

Whether an LLC gets a 1099 depends on how that LLC is taxed:

LLC tax classification	Get a 1099-NEC for $600+ in services?
Single-member LLC (disregarded / sole proprietor)	Yes
Multi-member LLC (partnership)	Yes
LLC taxed as an S corporation	No (with exceptions)
LLC taxed as a C corporation	No (with exceptions)

The two exceptions that flip a "No" back to "Yes": legal services (attorneys and law firms) and medical or health care services. Pay an LLC for either of those, and you file a 1099 even if it's a corporation.

That's the whole rule in one table. The rest of this guide is about how to apply it without guessing — starting with the document that tells you which row you're in.

Why "LLC" Tells You Almost Nothing

An LLC is created at the state level. The IRS, at the federal level, doesn't have a tax category called "LLC." Instead, every LLC is taxed as one of four things:

A single-member LLC is a "disregarded entity" by default — the IRS treats it like a sole proprietorship and the owner reports business income on a Schedule C.
A multi-member LLC is taxed as a partnership by default and files Form 1065.
An LLC can elect to be taxed as an S corporation by filing Form 2553.
An LLC can elect to be taxed as a C corporation by filing Form 8832.

This matters because the 1099 rule is written around tax classification, not legal form. The IRS instructions for Forms 1099-MISC and 1099-NEC say payments to a corporation — "including a limited liability company (LLC) that is treated as a C or S corporation" — generally don't require a 1099. The same paperwork word, "LLC," shows up on both sides of the line.

A solo graphic designer running a single-member LLC gets a 1099. A marketing agency that's an LLC taxed as an S corp does not. You cannot tell them apart from the business name, the website, or the invoice. The only reliable signal is the tax classification — and the standard way to capture it is the W-9.

When You Must Issue a 1099-NEC

If you run a business and pay an LLC, you generally must file Form 1099-NEC when all of these are true:

The payment was for services (not goods or merchandise).
You paid the LLC $600 or more during the tax year (see the threshold change below — this is the 2025 number).
The payment was made in the course of your trade or business (not a personal payment).
The LLC is taxed as a sole proprietorship or partnership — i.e., it's a disregarded single-member LLC or a multi-member partnership LLC.

Payments by cash, check, ACH, or bank transfer to a contractor land on Form 1099-NEC. Payments you make through a payment card or a third-party network like PayPal or Stripe are reported by the processor on a 1099-K instead — you don't double-report those. See our 1099-NEC guide for the box-by-box mechanics of filling out the form.

The deadline is tight. For tax year 2025, Form 1099-NEC is due to both the recipient and the IRS by January 31, 2026 — which, because that date is a Saturday, moved to February 2, 2026. There's no automatic extension the way there is for some other forms, so the W-9 you should have collected at the start of the relationship is what saves you in January.

When You Do NOT Issue a 1099 to an LLC

You generally skip the 1099 when the LLC is taxed as a corporation. The IRS instructions are explicit: payments to a corporation, including an LLC treated as a C or S corporation, are exempt from 1099-NEC reporting.

You also skip the 1099 in these situations, regardless of tax classification:

You paid for goods, not services. Buying $5,000 of inventory or supplies from an LLC isn't reportable on a 1099-NEC.
You paid less than the threshold. Under $600 to that LLC for the year (2025 rule), no form required.
The payment was personal. Paying an LLC handyman to fix your own home — not a business expense — isn't a trade-or-business payment.
You paid by card or third-party network. The processor handles the reporting on a 1099-K.

One caution: "we don't have to issue a 1099" is not the same as "the income isn't taxable." The recipient owes tax on every dollar of business income whether or not a 1099 ever gets filed. The 1099 is a reporting mechanism, not the thing that creates the tax.

The Two Exceptions That Override the Rule

Two categories of payment require a 1099 even when the recipient is a corporation — including an LLC taxed as an S or C corp. The IRS carved these out specifically so professional service corporations couldn't sidestep reporting.

1. Legal services. The IRS instructions state plainly: "The exemption from reporting payments made to corporations does not apply to payments for legal services." If you pay an attorney or a law firm $600 or more for legal work, you file a 1099 — period — no matter how the firm is organized. Attorney's fees go in Box 1 of Form 1099-NEC. Separately, gross proceeds paid to an attorney (for example, a settlement routed through a law firm's trust account) go in Box 10 of Form 1099-MISC, which is a different reporting line with its own rules.

2. Medical and health care payments. Payments of $600 or more to providers of medical or health care services are reportable on Form 1099-MISC (Box 6), and this also applies to corporations. A medical practice organized as an LLC taxed as an S corp still gets a 1099-MISC for the health care payments you made to it.

So if you're paying a law firm LLC or a medical practice LLC, stop checking the corporation box mentally. The exception applies — you file.

How to Read a W-9 in Ten Seconds

The W-9 (Request for Taxpayer Identification Number and Certification) is how you collect the recipient's legal name, taxpayer ID, and — most importantly — tax classification, before you pay them. Get it signed at the start of every contractor relationship, not in January. Our W-9 guide walks through the full form; here's the one line that decides the 1099 question.

On the W-9's federal tax classification line, the LLC will have checked one of these:

What's checked on the W-9	Tax classification	Issue a 1099?
Individual/sole proprietor box	Single-member LLC, disregarded	Yes
LLC box with P in the blank	LLC taxed as partnership	Yes
LLC box with S in the blank	LLC taxed as S corporation	No (unless legal/medical)
LLC box with C in the blank	LLC taxed as C corporation	No (unless legal/medical)

A detail that catches people: a single-member LLC that's a disregarded entity is instructed by the IRS not to check the LLC box. It checks the "individual/sole proprietor or single-member LLC" box instead, and it reports under the owner's name and Social Security number or the owner's EIN. So if you see that box checked, you're looking at a contractor who gets a 1099.

If a contractor refuses to give you a W-9 or gives you an obviously wrong TIN, the IRS can require you to apply 24% backup withholding — you hold back 24% of each payment and remit it to the IRS until the W-9 issue is resolved. That alone is reason enough to collect the form up front.

Worked Example: Five Vendors, One Tax Year

You run a small e-commerce business and paid five LLCs during 2025. Here's how the 1099 decision plays out for each:

Vendor A — Solo bookkeeper, single-member LLC (sole proprietor)
  Paid $4,800 by ACH for bookkeeping services
  Services + $600+ + sole prop LLC  ->  ISSUE 1099-NEC

Vendor B — Design agency LLC, taxed as S corp (W-9 shows LLC + "S")
  Paid $12,000 by check for branding work
  Services + $600+ but S-corp LLC   ->  NO 1099

Vendor C — Law firm LLC, taxed as S corp (W-9 shows LLC + "S")
  Paid $3,500 by check for a contract review
  Legal services exception applies   ->  ISSUE 1099-NEC (Box 1)

Vendor D — Packaging supplier LLC, taxed as partnership
  Paid $9,000 for boxes and shipping materials (goods)
  Payment is for goods, not services ->  NO 1099

Vendor E — Freelance copywriter, single-member LLC
  Paid $550 total for the year via PayPal
  Under $600 AND paid via 3rd-party network -> NO 1099-NEC
  (PayPal reports it on a 1099-K if its thresholds are met)

Two LLCs out of five get a 1099 — and it's the tax classification and payment type, not the "LLC" label, that decided each one. Vendor C is the trap: an S-corp LLC that you'd normally skip, except the legal-services exception puts it right back on your list.

The $600 vs. $2,000 Threshold Change — Read This Carefully

The reporting threshold is changing, and the year matters. Under the One Big Beautiful Bill Act (OBBBA, signed July 2025), the 1099-NEC and 1099-MISC reporting threshold rises from $600 to $2,000.

Tax year of the payment	Threshold	Forms filed in
2025 and earlier	$600	Early 2026 and before
2026 (payments on/after Jan 1, 2026)	$2,000	Early 2027

What this means in practice:

For 1099s you file in early 2026 (covering 2025 payments), use the old $600 threshold. Nothing has changed yet for that filing season.
For payments you make during 2026 (reported on forms filed in early 2027), the threshold is $2,000. A contractor you pay $1,500 in 2026 won't get a 1099 — but they still owe tax on it.
The $2,000 figure will be indexed for inflation in future years, so expect it to creep up.

The tax classification rule — corporations exempt, sole props and partnerships reportable, with the legal and medical exceptions — does not change. Only the dollar trigger moves.

When Your OWN LLC Receives a 1099

Flip the perspective. Your business is an LLC, and clients are paying you. When should a 1099 land in your mailbox, and what do you do with it?

If your LLC is a sole proprietor or partnership, business clients who paid you $600 or more for services in 2025 should send you a 1099-NEC by early February. Each one reports the same income to the IRS, so the numbers need to match what you report.

If your LLC is taxed as an S or C corp, most clients won't send a 1099 — and that's correct. The absence of a form doesn't reduce what you owe.

Here's the part that surprises people: a 1099 is not a prerequisite for reporting income. You report every dollar of business revenue on your return regardless of whether a 1099 arrived. If you earned $30,000 from twelve clients but only three sent 1099s, you still report the full $30,000. Underreporting because "no form came" is exactly the kind of mismatch the IRS flags, since they receive copies of every 1099 issued under your TIN.

Where it goes on your return:

Single-member LLC: report the income on Schedule C, then carry net profit to Schedule SE for self-employment tax (15.3% on net earnings, covering Social Security and Medicare).
Multi-member LLC: report on Form 1065, which flows to each member's Schedule K-1.
LLC taxed as S corp: report on Form 1120-S; the K-1 carries your share to your personal return.

If a 1099 you receive is wrong — say a client double-counted or reported a payment you got by card that's also on a 1099-K — contact them for a corrected form rather than quietly adjusting your numbers. And if you're sorting out whether the people working for you are contractors who need 1099s or employees who need W-2s, that's a separate and consequential decision; our employees vs. contractors guide covers the classification test.

Common Mistakes to Avoid

Deciding from the business name. "Acme Consulting LLC" tells you nothing about whether to issue a 1099. Only the W-9 does. Don't guess from the letterhead.

Skipping a law firm because it's a corporation. This is the single most common 1099 error. The corporate exemption does not apply to legal services. If you paid an attorney or law firm $600 or more, you file — every time.

Collecting the W-9 in January. By the time you need the classification, the contractor may be slow to respond, unreachable, or unwilling. Collect a signed W-9 before the first payment, every time.

Treating "no 1099" as "no tax." Whether you're the payer or the recipient, the threshold governs reporting, not taxability. Income under $600 (or $2,000 starting in 2026) is still fully taxable.

Double-reporting card and ACH payments. If you paid a contractor through PayPal, Stripe, or a credit card, the processor reports it on a 1099-K. Don't also issue a 1099-NEC for those same dollars — you'd be reporting the payment twice.

Using the wrong year's threshold. For 2025 payments, it's $600. For 2026 payments, it's $2,000. Mixing these up means either filing forms you didn't need or missing ones you did.

Get the 1099 Decision Right Automatically: How Jupid Helps

The 1099 question is really a recordkeeping question. To know who needs a form, you need a clean record of who you paid, how much, for what, and how each vendor is classified — across an entire year. Most small businesses don't have that until they're reconstructing it in January.

Jupid is an AI accountant that lives in WhatsApp and iMessage. Connect your bank account, and Jupid pulls in every transaction and auto-categorizes it with 95.9% accuracy — so your contractor and professional-services payments are already grouped and totaled when 1099 season arrives. Instead of scrolling a year of bank statements, you can ask in chat: "how much did I pay this vendor in 2025?" and get the number in seconds.

When a payment is ambiguous, you settle it in a quick message instead of opening a spreadsheet. Over time, Jupid learns how your business categorizes spending, so the right account gets applied automatically going forward — you can read more about that in transaction learning. Because your books stay current in the background, the totals you'd use to decide on each 1099 are accurate year-round, and Jupid handles automatic tax filing on numbers that already line up.

Jupid doesn't replace the W-9 you collect from each contractor — that's still on you. But it removes the part that usually breaks: knowing, with confidence, exactly what you paid each vendor. Try Jupid and stop reconstructing your year every January.

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This guide is for general educational purposes and does not constitute tax, legal, or accounting advice. Reporting thresholds, form requirements, and tax classifications vary by business situation and change over time. Verify current rules against IRS instructions and consult a qualified tax professional before issuing 1099s or filing your return.