The question arrives in a dozen forms. Does an S corp get a 1099? Do I need to send a 1099 to an LLC? What about a C corp, a partnership, or the guy who mows the lot and says he is “just a sole proprietor”? The rules are simpler than the number of ways people ask, because the answer turns on one thing: how the payee is taxed. This guide walks through each entity type, the exceptions that override the entity rule, and the threshold that applies to 2026 payments.
Key Takeaways
- Sole proprietors, individuals, partnerships, and LLCs taxed as sole proprietorships or partnerships get a 1099-NEC when you pay them enough for services in a year.
- S corporations and C corporations generally do not get a 1099, and that includes LLCs that have elected to be taxed as either kind of corporation.
- The exceptions cut across entity type: attorney fees and medical payments are reportable even when paid to a corporation.
- Payments made by credit card or through a payment app that files a 1099-K are excluded, because the processor reports them.
- The contractor’s own W-9 answers the entity question. Line 3 tells you whether a 1099 is required, so collect it before the first payment.
The rule in one paragraph
You issue a Form 1099-NEC to any person or business you paid for services in the course of your trade or business, if the total for the year reached the reporting threshold, if you paid by cash, check, or bank transfer, and if the payee isn’t a corporation. Corporations are exempt from most 1099 reporting. Everyone else is in.
Two things follow from that. First, “corporation” means how the payee is taxed, not what their name says. Second, you can only know how they’re taxed by looking at the W-9 they gave you.
Entity by entity
Sole proprietors and individuals
Yes, they get a 1099-NEC. This is the most common case: a freelance designer, a contractor who works under their own name, a consultant billing as themselves. If they checked “Individual/sole proprietor” on their W-9, report the payments.
Single-member LLCs
Yes, in almost every case. A single-member LLC is a disregarded entity by default, which means the IRS treats it like a sole proprietorship for tax purposes. The LLC label on the invoice changes nothing. The only exception is a single-member LLC that has filed an election to be taxed as an S corporation or C corporation, which the W-9 will show.
Partnerships and multi-member LLCs
Yes. A partnership isn’t a corporation, so payments to a partnership for services are reportable. A multi-member LLC is taxed as a partnership by default, so it gets a 1099 too, unless it has elected corporate taxation.
S corporations
No, in the general case. Payments to an S corporation for services don’t require a 1099-NEC. This is the entity people ask about most, usually because a contractor who used to be a sole proprietor has become an S corp and the paying business isn’t sure whether anything changed. It did: once the contractor is an S corporation, the 1099 requirement goes away, apart from the exceptions below.
LLCs taxed as S corporations
No. An LLC that has elected S corporation status is treated as an S corporation for this purpose. On the W-9, the payee checks the LLC box and writes “S” in the tax classification space. That letter is your answer.
C corporations, and LLCs taxed as C corporations
No, again with the exceptions below. A C corporation, or an LLC that wrote “C” on line 3 of its W-9, doesn’t receive a 1099-NEC for ordinary services.
Nonprofits and government entities
Tax-exempt organizations are treated like corporations for this purpose. Government agencies are exempt as well. You don’t issue a 1099-NEC to either.
The summary table
| Payee type | W-9 line 3 shows | 1099-NEC for services |
|---|---|---|
| Individual or sole proprietor | Individual/sole proprietor | Yes |
| Single-member LLC, default taxation | Individual/sole proprietor or LLC with no letter | Yes |
| Partnership | Partnership | Yes |
| Multi-member LLC, default taxation | LLC, P | Yes |
| LLC taxed as S corporation | LLC, S | No, except attorney and medical payments |
| LLC taxed as C corporation | LLC, C | No, except attorney and medical payments |
| S corporation | S corporation | No, except attorney and medical payments |
| C corporation | C corporation | No, except attorney and medical payments |
| Nonprofit or government | Other or exempt | No |
Scroll sideways to see all columns.
The exceptions that override the entity rule
The corporation exemption has holes, and two of them are common enough for a small business to hit.
Payments to attorneys
Fees paid to a lawyer or law firm for legal services are reportable on a 1099-NEC even if the firm is a corporation. Settlement proceeds paid to an attorney go on a 1099-MISC instead. If your business paid a law firm $2,000 or more in 2026, expect to issue a form regardless of how the firm is organized.
Medical and health care payments
Payments to physicians, clinics, or other providers of medical or health care services, made in the course of your business, are reported on a 1099-MISC even when the provider is incorporated. This matters for businesses that pay for employee physicals, drug testing, or occupational health services.
Payments that are not for services
Some payments have their own forms and rules. Rent paid to an individual or partnership goes on a 1099-MISC. Purchases of goods and merchandise are not reported at all. Payments to a corporation for rent are exempt.
Payments that are excluded no matter who you paid
Two exclusions apply across every entity type.
- Payments by credit card, debit card, or a third-party payment network that issues 1099-Ks. The processor reports those, so you leave them out of your 1099-NEC totals. Include only what you paid by cash, check, ACH, or direct bank transfer.
- Payments below the threshold. For services paid in 2026, the 1099-NEC threshold is $2,000 for the year, raised from $600 by legislation in 2025 and indexed after 2026. Payments during 2025 are still subject to the $600 rule when you file in early 2026.
How to tell which case you’re in
Don’t guess from the business name. “Smith Consulting LLC” could be a disregarded entity, a partnership, or an S corporation, and each has a different answer. The W-9 settles it. The contractor checks a federal tax classification box on line 3, and for LLCs they write a letter in the space provided: C, S, or P. Read that line, record it in the vendor’s file, and the 1099 decision is made before the first payment goes out.
If a W-9 is missing, request it now rather than in January. A payee who will not provide one is subject to backup withholding at 24 percent on future payments, and you still have to file a 1099 with whatever information you hold. For the difference between the two forms and how they connect, see 1099 vs W-9.
Making January a non-event
The 1099 season is only painful when the answer to “who did we pay, and how are they taxed?” lives in someone’s head. Put it in the books instead. Each vendor record should carry the W-9 classification. Each payment should carry a category that marks it as reportable contractor pay, and a note of the payment method so card payments can be excluded. A year-end report that totals reportable payments per vendor is then the entire 1099 workpaper. GlassJar assigns contractor payments to 1099 categories as they’re entered and produces a 1099 report of who was paid, how much, and when, which is the list you hand to whoever prepares the forms. The contractor payments guide covers the day-to-day recording side.
Frequently asked questions
Does an S corp get a 1099?
Generally no. Payments to an S corporation for services are exempt from 1099-NEC reporting, except for attorney fees and medical payments.
Do I need to send a 1099 to an LLC?
It depends on how the LLC is taxed. A single-member LLC or an LLC taxed as a partnership gets one. An LLC taxed as an S corporation or C corporation doesn’t. Line 3 of the LLC’s W-9 tells you which.
Do C corps get 1099s?
Not for ordinary services. Attorney fees and medical payments are the exceptions.
Who needs a 1099 if I paid them through a payment app?
If the app files 1099-Ks, nobody on your end. The processor reports those payments. Only payments you made by cash, check, or bank transfer count toward your 1099-NEC totals.
When is a 1099 required for 2026 payments?
When total reportable payments to a non-corporate payee for services reach $2,000 in the calendar year. The form is due to the recipient and the IRS by January 31, 2027.
Does a sole proprietor need a 1099 from me if I paid them under the threshold?
No. They still report the income on their own return, but no form is required from you.
