It’s that time of year when tax questions start to come into the Board Office. The most common question is about issuing 1099 forms for commission paid. According to the IRS, Brokers/brokerages must issue and file a 1099 MISC for each person you paid at least $600 during the year. (not corporations) Which leads to a common question… Is an LLC a person or a corporation? Well, it depends on how the LLC is taxed.
- You DO NOT have to issue a 1099 MISC to a LLC that has elected to be taxed as a corporation (C or S corp).
- You DO need to issue a 1099 MISC if the LLC was setup as a single member or partnership that did not elect to be taxed as a corporation.
How do you tell? Did you get a completed W-9 when issuing the commission check during the year? Businesses who pay service providers are required to obtain the W-9 before submitting the year end 1099 reports. If so, the LLC entity indicates how they should be taxed:
REMEMBER THIS GREAT ADVICE FROM OUR ACCOUNTANT:
“It never hurts to issue a 1099, or to receive one, even if it is not needed. The trouble lies when you don’t issue a 1099 when you should.”