Do I need to send 1099 to sub-contractors working for me who are an LLC
Thank you for your question.
Unless the company in question is a corporation, such as an S-Corporation,or if you paid them less than $600, then yes, you need to send the companya 1099-MISC form. Generally a Limited Liability Company (LLC) is not acorporation, but all you have to do is contact the company and ask them ifthey are an S-Corp (S-Corporation), etc. to make sure.If the company provided you a Social Security number instead of an EIN(Employer Identification Number) then they would appear to be operatingas a sole proprietor LLC, which is not a corporation.You'll need to file a 1099-MISC for each person to whom you have paid:...at least $600 in rents, services ......Some payments are not required to be reported, even though they may betaxable to the recipient or otherwise meet the reporting requirements.These exceptions include:Payments to a corporation ..."If you are unable to ascertain if the company in question is a corporation,you can just send them a 1099-MISC anyway.
When in doubt, issue a 1099. That's what many companies do. We don't know if that's right or wrong, but there are no penalties for issuing a 1099 where one isn't required. Thus, many businesses issue a 1099 for equipment or other purchases or to acorporation where they're not sure if the entity is a corporation or apartnership, LLC, etc.The safest bet is to send 1099s to any contractor that is an LLC, a limited liability partnership (LLP), a business trust or other unincorporated business entity.
If you are working on this year's taxes, keep in mind that you should havealready mailed 1099-MISC forms to companies as of January 31, or there mightbe a penalty. If that is the case, it might be in your best interest tocontact the company in question and find out if they are a corporation, asthat might negate the need to send a 1099.Also make sure the company's Taxpayer Identification Number (TIN), which couldbe a Social Security number, EIN, etc., matches their company or individual'sname, as a mistake there could trigger a penalty as well.Please let me know if you have any other questions, or require clarification of this matter. Otherwise please hit "ACCEPT", so I may receive credit for my response. Tips and feedback are also appreciated.
What if they do issue you a EIN could they be considered a llc. I know its a gray area - how do you think the labor dept would look at it? LLC A corp or a Sole propriorter? Thanks for your help
An LLC will not be a corp unless they are an S-corporation. Even with an EIN, a LLC is most likely to be viewed as a company that requires a 1099. It is seldom to find that a LLC is designated as an S-corp or a sole proprietorship.