A Practical, Real-World Guide for Your January Filing**
Every January, the same question hits my inbox over and over:
“Do I need to send a 1099-NEC to this person?
And what about companies — do they get one or not?”
And honestly, I get it.
Even experienced business owners get confused.
IRS rules seem simple, but in real life there are exceptions, mixed terms, and messy bookkeeping.
Once you add words like “LLC,” “S-Corp,” and “C-Corp,” everything gets blurry.
So today, I’m stripping out all the technical clutter and giving you the exact rule I use in practice.
Here it is in one sentence:
You do NOT issue a 1099 to a Corporation.
That’s it.
Really.
Why You Don’t Issue a 1099 to a Corporation
Corporations — big or small, single-owner or large — are treated differently by the IRS.
The IRS assumes corporations already have systems for payroll, insurance, compliance, and reporting.
Because of that, they don’t rely on 1099s to track corporate income.
So the rules split cleanly like this:
✔ Issue a 1099-NEC if:
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The vendor is an individual
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A sole proprietor (Schedule C)
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Or an LLC taxed as a sole proprietor
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And you paid them $600 or more for services
❌ Do NOT issue a 1099 if:
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The business you paid is a Corporation
Here’s the part that surprises people:
Some LLCs are corporations for tax purposes
If an LLC elected to be taxed as an S-Corporation, it counts as a Corporation,
even if its name still ends with “LLC.”
Meaning: No 1099 required.
This is one of the most common real-world mistakes:
Sending a 1099 to an LLC simply because it looks like a company name.
That’s not the rule.
The tax classification matters — not the name.
How I Handle This in Real Life (My Actual Workflow)
Every January, when I open a client’s books to prepare their 1099s, I follow the same checklist:
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Export the vendor list
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Filter vendors who were paid $600+
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Check each vendor’s W-9 for their tax classification
That’s it.
The W-9 tells you everything:
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Individual / Sole Proprietor → 1099 required
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LLC (no corporate election) → 1099 required
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Corporation → 1099 NOT required
And the golden rule we use in practice:
No W-9 = No 1099.
You can’t issue a form without the vendor’s tax info.
This one step alone prevents 90% of filing mistakes.
A Real Penalty Story I See Every Year
One year, a client hired a freelance designer and paid them nearly $8,000.
The designer had an “LLC” in their business name, so my client assumed that meant “corporation” and didn’t issue a 1099.
But the designer’s LLC was not a corporation for tax purposes.
And the IRS quickly sent a notice asking:
“Why didn’t you file a 1099-NEC for this vendor?”
The result?
Penalties + interest.
Later the client told me quietly:
“I thought an LLC was the same as a corporation…”
No.
Most LLCs are taxed exactly like sole proprietors, not like corporations.