Do I need to issue a 1099 to an LLC that elected S-corp status?

8 You're right to be checking on this - it can be confusing! The good news is that the rule is actually pretty straightforward: you generally do NOT need to issue 1099s to LLCs that have elected S-Corporation status. Since your contractors marked both LLC and selected the S-corp option on their W-9s, they're telling you they're being taxed as an S-Corporation, not as a partnership or sole proprietorship. S-Corporations are exempt from 1099 reporting requirements for services, just like C-Corporations. The only exception would be if you paid them for legal services (then you'd need to issue a 1099 regardless of their entity type) or if you made payments to them for things like rent, prizes, or certain other non-service payments. Keep those W-9s on file though! They're your documentation in case the IRS ever questions why you didn't issue 1099s to these contractors.

5 I went through the exact same headache last year with my consulting business. After wasting hours trying to figure out the 1099 rules, I finally used https://taxr.ai to review all my contractor documentation. Saved me so much stress! You upload your W-9s and payment records, and it tells you exactly who needs a 1099 and who doesn't. The site confirmed I didn't need to send 1099s to my LLC/S-corp contractors, just like everyone's saying here. But it also caught a contractor who had filled out their W-9 incorrectly that I would have missed. The tool also generates and files the 1099s you actually do need to send, which saved me from dealing with the IRS filing system.

19 Just wanted to follow up - I tried https://taxr.ai after seeing it mentioned here, and wow, it actually delivered! I uploaded my contractor information and it immediately sorted out who needed 1099s. Had 3 LLC/S-corps that I was unsure about, and it confirmed I didn't need to send them forms. The interface was straightforward and it explained the rules as it went. What really impressed me was when it flagged one contractor whose W-9 showed they were an LLC but hadn't indicated their tax treatment - turned out they needed to be treated differently. Would have completely missed that without the tool. The time saved was worth it alone - no more spreadsheets and double-checking tax rules!

6 If you're still confused after all this or need clarification directly from the IRS, good luck getting through to them these days! I spent 3 weeks trying to get someone on the phone about a similar 1099 question. Finally found https://claimyr.com and used their service to get through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS for you, then call you when an agent picks up. Got a definitive answer about my LLC/S-corp contractor situation in one call instead of weeks of frustration. The agent confirmed exactly what people are saying here - no 1099 needed for an LLC that elected S-corp status.

2 I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate for answers about some 1099 issues similar to what OP mentioned. The service actually worked exactly as described. I put in my info around 9am, went about my day, and got a call around 2pm connecting me directly to an IRS agent. No waiting on hold at all on my end. The agent confirmed that LLC/S-corps don't need 1099s for services (matching what everyone here said), and also answered my questions about a few other contractor situations. Saved me hours of frustration and gave me peace of mind knowing I heard it directly from the IRS.

7 Quick tip from someone who's been running a business for years: Always keep good records of these W-9s regardless of whether you need to issue 1099s or not! If you're ever audited, having documentation showing why you DIDN'T issue 1099s to certain contractors is just as important as properly issuing them to others. I keep a spreadsheet tracking all vendors, their entity type (from W-9), payment totals, and whether a 1099 was required.

17 Have you looked into using tax software that handles 1099s? I was in a similar situation last year and ended up using QuickBooks for this exact reason. It lets you mark vendors as corporations vs non-corporations and then only generates 1099s for the ones that need them.

Thanks everyone for all the helpful advice! As someone just starting their first business, this has been incredibly educational. I feel much more confident now about the 1099 requirements. Just to summarize what I've learned from this thread: - LLCs that elected S-corp status (marked on W-9) = NO 1099 needed for services - Regular LLCs without S-corp election = YES, 1099 required if paid $600+ for services - Keep all W-9s on file for at least 7 years as documentation - Exception: Legal services always require 1099s regardless of entity type I'm definitely going to look into some of the tools mentioned here like TaxR.ai to help streamline this process. And I'll make sure to get updated W-9s from contractors periodically to stay current. Really appreciate this community for helping new business owners navigate these confusing tax requirements!

Great thread! As someone who works in tax compliance, I want to emphasize one important point that sometimes gets overlooked: make sure your contractors are filling out their W-9s correctly in the first place. I've seen cases where contractors check "LLC" but then don't specify their tax classification, or they're confused about their own election status. If there's any ambiguity on the W-9, don't hesitate to ask them to clarify or provide a corrected form. It's much easier to get this right upfront than to deal with potential issues later. Also, remember that even though you don't need to send 1099s to S-corp elected LLCs for services, you still need to report these payments on Form 1096 as part of your annual filing if you're sending any 1099s to other contractors. The advice about keeping good records is spot-on - documentation is your best friend during tax season!

This has been such a helpful thread! I'm also a new business owner and was completely confused about the 1099 requirements for different entity types. One thing I learned the hard way is to also check if your state has different rules. I'm in California and discovered they have additional reporting requirements that caught me off guard. Even though federal law says no 1099 needed for S-corp elected LLCs, some states might have their own quirks. Also, for anyone just starting out like me, I'd recommend setting up a simple tracking system from day one. I created a basic spreadsheet with contractor name, entity type, total payments, and 1099 status. Takes just a minute to update each time I pay someone, but saves hours of scrambling at year-end. Thanks to everyone who shared their experiences and tools - definitely going to check out some of the resources mentioned here!

This thread has been incredibly helpful! As a tax professional, I want to add a few additional points that might help other business owners: 1. **Multi-member LLCs**: If you have an LLC with multiple members that hasn't elected S-corp status, they're typically taxed as a partnership and DO require 1099s. 2. **Single-member LLCs**: These are "disregarded entities" by default (taxed like sole proprietorships) and also require 1099s unless they've elected corporate tax treatment. 3. **Box 3 on W-9**: Pay special attention to this box where contractors indicate their tax classification. If it's blank or says "other," follow up for clarification. 4. **Legal services exception**: Even S-corps and C-corps must receive 1099-MISC for legal services if you paid them $600+ (Box 1). Also, regarding the state requirements mentioned - this varies significantly by state. Some states like California require 1099s to be sent to certain entities that are exempt federally, while others mirror federal rules exactly. Always check your specific state's requirements. Great job everyone on emphasizing proper documentation and W-9 collection. That really is the foundation of compliant 1099 reporting!