Do LLC S-Corp Get 1099? Here's the Answer

If you run your business as an LLC taxed as an S-Corp, you've probably wondered: do LLC S-Corp get 1099 forms? The short answer is that usually not.

Most S-Corps are exempt from 1099 reporting, and that exemption applies whether you're a multi-member corporation or a one-person LLC that elected S-Corp status. But there are exceptions worth knowing about, and you'll want to understand what to do if a client sends you one anyway.

Grab your favorite beverage, and here's everything you need to know!

What Is an "LLC S-Corp"?

An LLC S-Corp is a Limited Liability Company that has elected to be taxed as an S-Corporation by the IRS.

Those are two separate things worth keeping apart:

• An LLC is a legal business structure: It's how your state recognizes your company

• An S-Corp is a tax classification: It's how the IRS chooses to tax your income.

When you elect S-Corp status for your LLC, your legal structure stays exactly the same. You're still an LLC on paper. You've just told the IRS to treat your income differently.

As an LLC, you're protected from personal liability if the business runs into legal or financial trouble. As an S-Corp, you get to split your income between a salary and distributions, which can reduce what you owe in self-employment taxes. With this setup, you get both benefits at once!

Learn more about the pros and cons of an S-Corp.

How Does an LLC Taxed as an S-Corp Work?

Once you elect S-Corp taxation, the way money flows through your business changes.

Instead of reporting all your profits on Schedule C like a sole proprietor would, your LLC files a separate S-Corp tax return (Form 1120-S). You pay yourself a reasonable salary as an employee of your own business, and that salary goes through payroll, meaning you pay the standard payroll taxes on it.

Any profit left over gets distributed to you as a shareholder distribution, and those distributions are NOT subject to self-employment tax.

That split is the core of the S-Corp tax strategy. If your LLC generates $120,000 in profit and you pay yourself an $80,000 salary, you only pay payroll taxes on the $80,000. The remaining $40,000 passes through as a distribution without that extra tax hit!

The more profit your business generates, the more that structure can save you during tax season.

If you want to see whether the S-Corp election makes sense for your numbers, use this Is S-Corp Worth It calculator to run the math!

What Are 1099 Forms?

A 1099 is an IRS information return. It's how businesses report payments made to vendors, contractors, and other non-employees so the IRS knows that money changed hands.

There are a few different types, but the one most relevant to small business owners and freelancers is the Form 1099-NEC (Non-Employee Compensation).

If a business pays an individual or unincorporated entity $600 or more for services during the tax year, they're generally required to issue a 1099-NEC reporting that payment.

Other common forms include:

• 1099-MISC: Used for rent, prizes, and other miscellaneous income

• 1099-K: Issued by payment processors like PayPal or Stripe when transaction thresholds are met

• 1099-INT: For interest income

For most service-based businesses, the 1099-NEC is the one that comes up most often.

The form exists so the Internal Revenue Service (IRS) can cross-reference income. If someone pays you $10,000 and reports it on a 1099-NEC, the IRS expects to see that money on your tax return.

If an LLC is an S-Corp, Do They Get a 1099?

Generally, no. S-Corporations are exempt from 1099-NEC reporting.

When a client or business pays your LLC for services, they're typically required to issue a Form 1099-NEC only if the recipient is an individual, sole proprietorship, partnership, or LLC that hasn't elected corporate tax treatment.

Because your LLC has elected S-Corp status, it's treated as a corporation for tax purposes, and corporations are exempt from the 1099-NEC requirement.

In practice, that means most of your clients don't need to send you a 1099-NEC, and many won't. When you fill out a W-9 for a new client, you'll indicate that your business is taxed as an S-Corporation, which flags your exemption right at the source.

That said, a couple of exceptions apply:

• Legal fees and legal services: Payments made to attorneys are reportable regardless of your business structure.

• Healthcare and medical payments: Payments for medical or healthcare services are also exempt from the corporate exclusion.

• Payment processors: Stripe, PayPal, and similar platforms issue 1099-Ks based on how much money moves through your account each year, and your S-Corp status doesn't factor in.

Learn more about whether a regular LLC gets a 1099.

Filling Out Your W-9

The W-9 is how you tell clients how to classify your business for tax purposes. Filling it out correctly is what keeps unnecessary 1099s out of your mailbox!

Box 3 is where you indicate your federal tax classification. If your LLC is taxed as an S-Corp, you check "LLC" and write "S" in the accompanying box.

There's also an "Exempt payee code" box. S-Corps enter code 5 here, which signals to the client that you're exempt from 1099-NEC reporting.

If you recently made the S-Corp election, send an updated W-9 to your existing clients. Most won't know your status changed unless you tell them. And keep a copy of your W-9 on file so you're not hunting for it when you need it!

What If a Client Sends You a 1099 Anyway?

This is very common. Plenty of businesses send 1099s to everyone they pay, regardless of entity type, either out of habit or just to be safe.

Getting a 1099 when you're an LLC S-Corp isn't automatically a problem.

The income still needs to show up on your Form 1120-S, and the 1099 just means that the IRS has a record of that payment on their end, too.

You won't be taxed twice as long as your S-Corp return is filed correctly and the income is accounted for. Just make sure the amount on the 1099 reconciles with your books!

Do LLC S Corps Have to Send 1099s to Others?

Yes! Your S-Corp election affects whether you receive 1099s, not whether you have to send them. If your business pays an independent contractor or freelancer $600 or more in a year, you're still required to issue them a 1099-NEC. That obligation doesn't go away just because you're an S-Corp.

Learn more about how to know if you need to send someone a 1099.

So, Do LLC Taxed as S-Corp Get 1099?

No, S-Corps are usually exempt from 1099-NEC reporting, so most clients won't be required to send you one.

Once you understand that it's your S-Corp election, NOT just having an LLC, that changes your 1099 status, everything gets a lot less confusing. All you need to do is keep your W-9 updated, reconcile any 1099s you receive, and stay on top of sending them to your own contractors.

If you're still figuring out whether the S-Corp election makes sense for your business, use our S-Corp calculator to run the numbers, or book a call with the Desi Tax team to get more clarity on your taxes!