Do I need to send a 1099-NEC to an LLC?

Usually yes. The instinct that LLCs are exempt comes from confusing two different things: an LLC is a state law structure, and the 1099 exemption is about federal tax classification. They are not the same, and one LLC can be taxed four different ways.

The four ways an LLC can be taxed

• Single-member, disregarded. Taxed as its owner. File a 1099-NEC.
• Multi-member, partnership. File.
• LLC electing S corporation. Generally exempt.
• LLC electing C corporation. Generally exempt.

Two of the four need a form and two do not, which is why guessing from the name gets it wrong about half the time.

Read line 3a of their W-9

On the March 2024 revision, line 3a has seven boxes. One is "LLC" with a space beside it for a letter:

• P for partnership. File.
• S for S corporation. Generally do not file.
• C for C corporation. Generally do not file.

If the LLC box is ticked with no letter, the form is incomplete and you should ask rather than assume. A single-member LLC that is disregarded should not tick the LLC box at all: the IRS instruction is to tick the box for the owner's classification, usually Individual/sole proprietor, and put the owner's name on line 1 with the LLC name on line 2.

That instruction is the one freelancers get wrong most often, and a W-9 with the LLC name on line 1 is a name and TIN mismatch waiting to become your problem.

Why the mismatch lands on you

If the name and TIN on the 1099 do not match IRS records, the IRS sends a B-notice, and it goes to the payer. You then have to start backup withholding at 24% on future payments until it is resolved. The contractor filled the form in wrong; you carry the consequence.

What to do when the entity type is missing

Ask for a corrected W-9 before you file. Filing on a guess exposes you either way: file when you should not and you have created a report the contractor must explain, or skip one you owed and the penalty is yours.