We have an LLC and have paid several individuals more than $600 for services, etc. What service providers should we issue a 1099 for? Mostly we are talking about newspaper advertisers and sign makers/installers?

Form 1099s are required to be sent to individuals, sole proprietorships and partneships.

You do NOT send them to corporations.

Why do we not send 1099's to Corporations? How do I prove to the IRS I didn't make $200,000, the corporations did. I own a trucking company.
Do we send 1099's to LLC's? I have quite a few of those also.

Debra:

I have no idea why it is not required; that is just what the rules say.

The LLC is a LEGAL entity, NOT a tax entity. Most of them are either sole proprietorships or partnships, so send them the 1099.

Also note that the IRS requires that you send a 1099 for payments exceeding $600 for the year to Attorneys and those you pay Rent to.

I think the IRS excludes corporations as many are publicly traded, which requires filings with the SEC on a monthly, quarterly, and yearly basis. Additionally, many corporations are audited on a yearly or bi-yearly basis to ensure that income is being reported correctly.

DebraCombs:

If you are operating a Corporation, it is a separate entity from you with a different Identification Number - you use a social security number & the company uses a Federal Identification Number (FEIN).

In order to ensure that you maintain the corporate veil, ie: protection from your personal assets - keep the funds for the corporation in a [U]Separate Bank Account[U] using the identification number for the corporation.

To further protect yourself, you can make yourself an employee of the organization, and depending on how many employees you have, still take advantage of the tax benefits of being a self-employed individual.

However, if you operate an LLC, the tax treatment is different. Additionally for LLC's, depending on the state you live in there may be options available to you from year to year. For example, in Virginia an LLC can be treated as a Corporation or a Partnership in any given tax year.

When deciding [I]Who[I] to send a 1099, remember that the IRS requires a 1099 for payments exceeding $600 to Attorneys, Advertisers, & those you Rent from, regardless of whether the Vendor is Incorporated.

There is no IRS 'rule' that indicates that you shouldn't send a 1099 to a corporation, you may wish to send a 1099 to any Vendor you paid $600 to and that is acceptable.

However, you are only required to send a 1099 to those listed above as well as Individuals/Sole Proprietors and Partnerships.

When doing business with a new Vendor, you should always get a W9 Form from them to ensure you have the information you need at tax time.

Hope this helps!

You don't have to give a corporation a 1099, but if it is a very large item on your profit and loss statement, you can def give a 1099. Actually I would recommend you do.

Greg Freyman, CPA

Www.taxproff.com

Also,

Please keep in mind that there will be major changes in 1099 reporting for 2012:

http://www.greenleafaccounting.com/change-in-1099-reporting

Where corporations will be receiving 1099's


Thanks,

Greg Freyman, CPA

Www.taxproff.com

Do we have to give 1099's to utility companies? I am new to accounting?

Most utility companies are corporations - no, you do not have to send them a 1099.

The rental portion of the 1099 requirements was repealed in May 2011. http://www.irs.gov/formspubs/article/0, id=239769,00.html

My business is a "one man", no employees underground sprinkler repair company. Sometimes we may have to get someone to pull tree stumps up or something or check underground wirings. The question is "when we issue them a 1099 misc, and do not deduct taxes, leaving them to report the income to IRS. How and where can I, and do I, show this on my taxes without being out of money because I didn't take out taxes on 1099 but the IRS will take it out of mine because the money I was allowed to pay out is also income that I had received.

You deduct the fees you pay to these people as "contract labor" on your Schedule C.

A Form 1099-MISC is require for each person to whom you paid $600 or more in Calendar Year 2011.