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Richard, Attorney
Category: Business Law
Satisfied Customers: 55605
Experience:  32 years of experience practicing law and a businessman.
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I have an LLC in the State of Florida that sells software.

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I have an LLC in the State of Florida that sells software. I advised a friend (he routinely performs beta testing of my software and gives me constructive ideas) that for any leads he gave me (contact information of individuals that may be interested in buying my software) I would pay him 20% of the sales. A recent contact resulted in a $3000.00 sale. What is the best way to pay him. Do I have to do the SS, income tax withholding or can I issue him a 10-99 at the end of the year?

Thank you,

Vaughn Whitehead
Virtual Technology, LLC [email protected] [email protected] (personal email)
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. This person is not an employee and thus it would not be appropriate to treat him as one. Rather, this is simply compensation to him as an independent contractor and the proper treatment would be to issue a 1099 to the friend in January for any payments made during the preceding calendar year.

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