If you’ve worked with an LLC (Limited Liability Company), you might be asking whether you need to give them a 1099 form as a business owner or independent contractor. It depends, is the answer. The following are some things to take into account:
A single-owner LLC is one that only has one member. A single-member LLC is viewed by the IRS as a “disregarded entity,” which means that the owner discloses profits and losses on their personal tax return and the LLC is not taxed separately. You do not need to send a 1099 form if you dealt with a single-member LLC and paid them more than $600 in a calendar year. Do I Require an EIN?
A unique nine-digit number called an EIN (Employer Identification Number) is given to firms by the IRS for tax-related reasons. A single-member LLC or sole proprietorship does not require an EIN unless it has workers or is subject to certain IRS excise taxes. However, you will want an EIN if your LLC has many members or if you have chosen to be taxed as a corporation.
You might occasionally need to seek for credit as a business owner. Your Social Security Number (SSN) may occasionally be required on a credit application. When applying for credit, you can use your EIN rather than your SSN if you have one. Protecting your personal information and avoiding identity theft can be accomplished by using your EIN rather than your SSN.
In conclusion, whether an LLC has a single member or many members will determine whether or not you must give them a 1099 form. You do not need to send a 1099 form if you dealt with a single-member LLC and paid them more than $600 in a calendar year. You also need an EIN if your LLC has many members or if you chose to be taxed as a corporation. Last but not least, if you have an EIN, you can apply for credit without providing your SSN.