Yes. If your business pays an LLC that is taxed as a partnership $600 or more for services during the calendar year, you have to send it a Form 1099-NEC. The corporate exemption that lets you skip 1099s for C-corporations and S-corporations does not cover an LLC classified as a partnership — for reporting purposes, the IRS treats that LLC the way it treats any other partnership or sole proprietor.
Why the LLC Label Alone Doesn’t Answer the Question
“LLC” is a state-law status, not a federal tax classification. The same LLC can elect to be taxed as a disregarded entity, a partnership, an S-corporation, or a C-corporation, and the election it made is what controls your 1099 obligation.
The IRS exempts payments to corporations from most 1099-NEC reporting. That exemption extends to an LLC only when the LLC has elected to be taxed as a C-corporation or an S-corporation. An LLC taxed as a partnership sits outside the exemption. Pay it $600 or more for services in the course of your trade or business, and a 1099-NEC is required.
Personal payments don’t count. The $600 threshold applies to payments made in the course of your trade or business, so hiring a contractor for repairs at your home generally falls outside the rule.
How to Confirm Classification From the W-9
Before you pay any contractor, collect a completed Form W-9. It gives you the payee’s legal name, address, taxpayer identification number, and — the piece that decides everything here — federal tax classification.
Look at Line 3a. If the recipient checks the “LLC” box, they must also enter a single letter in the space next to it:
- C means the LLC is taxed as a C-corporation.
- S means the LLC is taxed as an S-corporation.
- P means the LLC is taxed as a partnership.
A “P” means you file a 1099-NEC once you cross the $600 threshold. A “C” or “S” means the corporate exemption applies to ordinary service payments and you generally don’t file (see the legal and medical exceptions below). A single-member LLC treated as a disregarded entity doesn’t check the LLC box at all — it checks the box matching its owner’s classification.
If you don’t have a W-9 on file and can’t determine the entity type, the safer move is to file the 1099-NEC. The penalty for filing an unnecessary 1099 is much lighter than the penalty for skipping a required one. A completed W-9 in your records is also your best evidence that any misclassification was inadvertent rather than willful.
The IRS runs a free TIN Matching service that lets you validate name-and-TIN combinations before you file. Access requires enrollment through the IRS Payer Account File database, and you can check names one at a time or in bulk. Running matches early catches mismatches before they turn into penalty notices.
Which Form and Which Box
The form depends on what you paid for. For an LLC taxed as a partnership, the corporate exemption does not apply to any of these categories.
- Services: $600 or more goes in Box 1 of Form 1099-NEC.
- Rent: $600 or more goes in Box 1 of Form 1099-MISC.
- Royalties: $10 or more goes in Box 2 of Form 1099-MISC.
Same W-9 analysis for each. Classification code “P” on Line 3a means you report; “C” or “S” means the exemption covers you for these payments.
Attorney Fees and Medical Payments Get Reported Either Way
Two categories override the corporate exemption entirely, so classification doesn’t help the payer avoid filing:
- Attorney fees of $600 or more go in Box 1 of Form 1099-NEC, regardless of the law firm’s entity type.
- Payments of $600 or more to physicians and other health care providers go in Box 6 of Form 1099-MISC, even when the provider is a professional corporation.
The only carve-out on the medical side is for tax-exempt hospitals, extended care facilities, and facilities owned by government entities. An LLC partnership that provides legal or medical services is reportable on both counts — neither its partnership classification nor any corporate exemption gets it out of the return.
Card and Payment-App Payments Don’t Count Toward the Threshold
Payments you make to an LLC partnership by credit card, debit card, or through a third-party payment network such as PayPal or Venmo are not reported on your Form 1099-NEC. The payment settlement entity reports those on Form 1099-K instead. Including them on your 1099-NEC would create a duplicate report.
The practical effect: when you’re tallying whether you’ve crossed the $600 threshold for a given contractor, count only payments made by check, ACH transfer, cash, or wire. Card and platform payments are out of your column.
The 1099-K threshold itself currently sits at more than $20,000 in gross payments and more than 200 transactions in a calendar year. Congress reinstated that prior threshold before a lower $600 figure from the American Rescue Plan took effect.
The January 31 Deadline
Both copies of Form 1099-NEC — the one you furnish to the LLC partnership and the one you file with the IRS — are due by January 31 of the year after payment. There is no automatic extension.
If you file 10 or more information returns of any type in a year — W-2s, 1099-NECs, 1099-MISCs, and others combined — you must file electronically. Businesses filing fewer than 10 can still send paper, using Form 1096 as the transmittal cover sheet. Most businesses with even a handful of contractors clear the 10-return threshold once every return type is added together.
What Happens if You Skip the Filing
The IRS charges per-return penalties for 1099s that are late, incorrect, or not filed. The amount scales with how long the return sits uncorrected. For returns due in 2026:1Internal Revenue Service. Information Return Penalties
- Corrected within 30 days of the deadline: $60 per return, up to $239,000 for small businesses.
- Corrected after 30 days but by August 1: $130 per return, up to $683,000 for small businesses.
- Corrected after August 1 or never filed: $340 per return, up to $1,366,000 for small businesses.
- Intentional disregard: $680 per return with no annual cap.
Small businesses for these caps are those with average annual gross receipts of $5 million or less over the three most recent tax years. Larger businesses face higher maximums. The figures are inflation-adjusted each year.
The intentional disregard penalty is the one to watch. If the IRS concludes you knew a 1099 was required and skipped it anyway, it can assess $680 per form with no ceiling. Keeping the W-9 on file, and acting on what it says, is the most straightforward defense that any missed filing was a mistake rather than a choice.2Internal Revenue Service. 20.1.7 Information Return Penalties
When the Contractor Won’t Give You a W-9
If a contractor refuses to provide a W-9 or gives you a TIN that doesn’t match IRS records, you’re required to withhold 24% of each payment and send it to the IRS. That’s backup withholding, and it applies to all reportable payments, not just those to LLC partnerships.
The IRS flags TIN mismatches through CP2100 or CP2100A notices, which start the “B” notice process. After the first notice, the payee can stop the withholding by returning a corrected W-9. After a second notice within three years, the payee has to provide a copy of their Social Security card or an IRS Letter 147C verifying their name and number. Amounts withheld are reported on Form 945, filed and deposited separately from your regular payroll taxes.