Do LLCs get a 1099? Your 2026 tax guide

Tax season brings a wave of paperwork that can feel overwhelming, especially when you’re trying to figure out which of your partners and vendors need specific IRS forms. For home service pros who hire subcontractors or work as one, a common source of confusion is whether a Limited Liability Company (LLC) should receive a 1099.

The answer isn’t based on the business structure alone, but on how that business chooses to be taxed by the IRS. Here’s what you need to know about your reporting requirements for the 2026 tax year—so you can stay compliant, avoid penalties, and keep your books clean.

Overview: Do LLCs get a 1099 in 2026?

Yes, some LLCs must receive a Form 1099-NEC if they were paid $600 or more for services during the year and are not taxed as corporations. The determining factor is the LLC’s federal tax classification, not its legal structure. LLCs taxed as sole proprietorships or partnerships are generally reportable, while those taxed as S corporations or C corporations are usually exempt, with limited exceptions such as attorneys.

Table of contents

What is a 1099 form?

An IRS Form 1099 is an information return used to report payments made to individuals or businesses that are not your employees. For plumbers, electricians, general contractors, and other home service pros, these forms help the IRS track income that isn’t covered by traditional W-2 wages. When you issue a 1099, you’re essentially notifying the IRS of a business expense you paid out and the income the recipient earned.

You’ll typically need to use a 1099 when you:

• Hire subcontractors like independent technicians, installers, or project-based crews.
• Pay professional fees to independent cleaners, handymen, or specialists.
• Pay rent for office space or equipment storage.
• Pay legal fees or settlements to an attorney.

The IRS uses these forms to match the money your business paid with the income reported by the recipient, ensuring tax accuracy across the board.

What is Form 1099-NEC?

IRS Form 1099-NEC is specifically designed to report nonemployee compensation. It’s the form most home service-based businesses use to report payments for services provided by an individual or an LLC.

You must issue a 1099-NEC if all of the following are true:

• The payment was for services: You paid for labor or professional expertise rather than just physical supplies.
• The recipient is not an employee: The worker is an independent contractor or a separate business entity.
• The total was $600 or more: This threshold applies to the cumulative amount paid to that vendor across the entire calendar year.
• The vendor is not a corporation: Only LLCs taxed as individuals, sole proprietorships, or partnerships require this form

This typically applies to freelancers, independent technicians, and project-based specialists you bring on to help finish a job. For example, if you’re a general contractor who pays an LLC more than $600 to install cabinetry, you must issue a 1099-NEC—provided that the LLC is not taxed as a corporation.

Staying on top of subcontractor payments throughout the year makes taxes much easier. With Housecall Pro Accounting, you can tag vendors, track total payments automatically, and run clean reports so you know exactly who needs a form—without digging through spreadsheets.

Book a call to learn more.

What is Form 1099-MISC?

While the NEC form handles service labor, IRS Form 1099-MISC is used for other specific types of business payments. It covers miscellaneous expenses that keep your business running but aren’t direct payments for subcontracted work. 

Common reportable payments for a 1099-MISC include:

• Rent payments: If your plumbing company rents a warehouse or office space from an LLC, you may need to issue a 1099-MISC to the landlord for your payments.
• Legal services: Fees paid to a lawyer for setting up your business or other fractional legal services often require a 1099-MISC. Note that attorneys are a major exception to the corporate exemption rule; you must report legal payments even if the law firm is a corporation.
• Settlements: Certain legal settlements or other specific reportable payments are filed on this form.

Do LLCs get a 1099?

Yes, some LLCs receive 1099s. The most important factor in determining if an LLC gets a 1099 is its tax classification, not its legal name. This classification is established when the business is formed and dictates how the IRS treats that entity.

Learn more about business entity structure and taxation: LLC vs. sole proprietorship

Single-member LLCs

A single-member LLC consists of just the business owner (they’re a self-employed individual). The IRS classifies it as a disregarded entity because it is treated the same as a sole proprietorship for tax purposes.

Reporting rule: If you pay a single-member LLC more than $600 for services in a calendar year, you must issue that entity a 1099-NEC unless they’ve elected to be taxed as a corporation.

Let’s illustrate using a common scenario:

You’re a general contractor running a residential remodeling and renovation business. You hire a plumbing subcontractor—Dillon Plumbing, a single-member LLC taxed as a sole proprietorship—to work on kitchen and bathroom upgrades. 

In 2025, you paid Dillon Plumbing $42,000. Because the LLC is taxed as a sole proprietorship, not a corporation, you will issue them a 1099-NEC for $42,000, the full amount your business paid the subcontractor.

You also hired Reggie’s Cabinetry as a subcontractor for the same projects. Reggie’s Cabinetry is also an LLC, but elected to be taxed as an S corp when it formed the business entity. In 2025, you paid them $13,000. You do not need to send Reggie’s Cabinetry a 1099-NEC because the business pays taxes as a corporation, not an individual.

Multi-member LLCs

These businesses involve two or more partners working together. The IRS typically taxes multi-member LLCs as partnerships by default.

• Reporting rule: If the LLC is taxed as a partnership and you paid them $600 or more, you must issue a 1099-NEC. However, if they have opted for corporate taxation, they are exempt.

Let’s continue our example:

Your contractor business hires a tile installation LLC consisting of three partners. You pay them a total of $15,000 in 2025. This business is taxed as a partnership, so you issue them a 1099-NEC.

LLCs taxed as S corps or C corps

When an LLC elects to be taxed as an S corporation or C corporation, it falls under the corporate exemption rule. 

Reporting rule: You don’t need to issue a 1099-NEC to these entities. The only major exception to this is for payments to lawyers and law firms; they must receive a 1099 regardless of their corporate status.

How to know if an LLC should receive a 1099

The most reliable way to determine a vendor’s tax status is to review their Form W-9. This document contains their legal name, address, and, most importantly, their federal tax classification. Collect this form before work begins so you aren’t left guessing when the January deadline approaches.

Learn more about misclassifying vendors and subcontractors in our free webinar.

W-9 cheat sheet

Review the “Federal Tax Classification” box on the W-9 to determine your next steps:

W-9 classification	1099-NEC required?
Individual/sole proprietor	Yes
Single-member LLC	Yes
Partnership/multi-member LLC	Yes
S corporation	No (Exempt)
C corporation	No (Exempt)

Confirm your payment method

Even if a vendor’s tax status requires a 1099, the way you paid might change your reporting obligations. The IRS wants to avoid double-reporting income, so it places the burden on different parties depending on the transaction type:

• Direct payments: If you pay via cash, check, or ACH (bank transfer), your business is responsible for issuing the 1099-NEC.
• Third-party payments: If you pay via credit card, debit card, or apps like PayPal and Venmo, the payment processor reports those transactions on Form 1099-K. You should not include these amounts on your 1099-NEC.

Common 1099 mistakes to avoid

Small errors in reporting can lead to significant headaches with the IRS, including potential fines and audits. Staying organized throughout the year is the best way to keep your business off the IRS’s radar. 

By avoiding a few common pitfalls, you can protect your business and maintain healthy relationships with your subcontractors:

• Assuming all LLCs are exempt: Always check the tax classification; many LLCs are taxed as individuals and require reporting.
• Forgetting to collect W-9s up front: Chasing down forms in January is stressful. Add a blank Form W-9 to your business contracts and make completing it a requirement before you issue the first payment. You can upload a digital copy in Housecall Pro so it’s automatically part of any contract you send.
• Reporting credit card payments: Doubling up on reporting (you and the card processor) can cause mismatched income reports that trigger IRS notices.
• Missing the deadline: 1099-NEC forms must be sent to recipients and the IRS by Jan. 31 each year. Late filings can result in penalties.

What happens if you don’t issue a required 1099?

Your vendors may be hesitant to work with you if you’ve incorrectly reported your payments to them, as it can complicate their tax filings. And, the IRS may assess fines and penalties against your business, depending on how late you filed the forms and whether it determines that failing to report the payment was intentional.

Stay organized and stay off the IRS’s radar with Housecall Pro’s compliance and recordkeeping features.

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