Who needs to file a 1099?
Any business that makes reportable payments during the tax year may be required to file a 1099 with the IRS.
Under Internal Revenue Service (IRS) 1099 rules, the obligation falls on the payer, not the recipient. If you pay someone for services while operating your business, you are responsible for reporting that payment.
This applies whether you are a corporation, LLC, partnership, or sole proprietor. Personal payments made outside of business activities are not reportable.
Businesses Required to File 1099 Forms
Most businesses with vendor or contractor payments have 1099 obligations.
If you operate a business and pay third parties, you are subject to IRS 1099 filing requirements.
Businesses that commonly must issue 1099s include:
- Sole proprietors
- Partnerships
- Limited liability companies (LLCs)
- Corporations making reportable payments
Even small or newly formed businesses fall under 1099 payer rules if they meet the payment criteria.
Payments That Trigger 1099 Filing
Certain types of payments trigger 1099 filing requirements.
The most common threshold is $600 or more paid during the calendar year to a single recipient; however, this depends greatly on the types of payments being made and form being reported.
Reportable vendor payments often include:
- Non-employee compensation (reported on Form 1099-NEC)
- Professional services (legal, accounting, consulting)
- Rents
- Prizes and awards
- Certain other income payments
These business reporting obligations apply regardless of whether the payment was made by check, ACH, or other electronic methods.
For a breakdown of forms, learn about the most common tax forms and the differences between Form 1099-NEC vs 1099-MISC.
Who Is Exempt from Filing a 1099?
Some payees are exempt from receiving 1099 forms. The exemption depends on the recipient’s tax classification and the type of payment.
Common exemptions include:
- Payments to most C-corporations and S-corporations
- Payments made via credit card or third-party networks (reported on Form 1099-K instead)
- Payments for merchandise, freight, or storage
These exemptions are a key part of understanding who must issue a 1099 and when reporting is not required.
When You Are Not Required to File
Not every payment requires a 1099, and thresholds vary by form. While $600 is the most common IRS reporting threshold, some 1099 forms require reporting at lower amounts depending on the payment type.
You generally do not need to file a 1099 when:
- The payment does not meet the IRS reporting threshold for that form
- The payment was personal, not business-related
- The vendor is a qualifying exempt entity
- The payment was processed by a payment settlement entity
Understanding these vendor payment reporting limits helps reduce unnecessary filings, missed obligations, and corrections.
FAQs
Q: Do small businesses need to file 1099s?
A: Yes – Small businesses must file 1099s if they meet IRS filing requirements. Business size does not eliminate 1099 obligations.
Q: Do sole proprietors file 1099s?
A: Yes – Sole proprietors must issue 1099s for reportable payments made during business.
Q: Do LLCs receive 1099 forms?
A: Sometimes – LLCs taxed as partnerships or sole proprietorships typically receive 1099s. LLCs taxed as corporations often do not.
Q: Do I file a 1099 for service providers?
A: Usually, yes – Independent contractor reporting is one of the most common 1099 requirements, especially for services paid at or above $600.
Q: Are corporations exempt from 1099 filing?
A: Often, but not always. Most corporate vendors are exempt, but legal services and certain other payments still require reporting.
Learn More About 1099 Filing Requirements
For official IRS guidance, see the General Instructions for Certain Information Returns on the IRS website.
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