Zera

What Every Construction Business Must Know About 1099s...

Every year when tax time rolls around, many business owners wonder whether they must send 1099s to their vendors.

To help construction business owners understand the circumstances under which the IRS requires issuing 1099 forms, here is your basic “must-know” information.

Many freelance professionals and independent contractors operate as Limited Liability Companies (LLCs). The requirements for when a business should send a 1099 form to an LLC vary, as does the 1099 form to send.

Generally speaking, this is when LLCs should or should not receive a 1099:

When a single-member LLC is taxed as a Sole Proprietorship or a multi-member LLC is taxed as a Partnership, any business that pays the LLC $600 or more for services in the year must send it a 1099-NEC (Nonemployee Compensation) form.

If a business has sold $5,000 or more of consumer products to an LLC for resale, it may send Form 1099-NEC or 1099-MISC.

If an LLC is taxed as an S Corporation or a C Corporation, no 1099 is necessary under most circumstances.