This is a question I get asked often from new clients. In short, 1099s are issued by businesses (sole-proprietors, LLCs, partnerships, corporations, etc.) who’ve made payments in excess of $600 to individuals or other businesses during the ordinary course of business. This includes services (contract labor), rents, royalties, and interest.
There are certain exceptions that apply to this $600 threshold, but we’ll attempt to keep this post as brief as possible. Under Code Section 6041, payments made to a “corporation” do not require returns of information, however 1099’s are still issued to law firms regardless of their entity structure.
Failure to file these required informational returns will result in penalties ranging from $30-100, depending on how late they are filed.
For help preparing Forms 1099-MISC, contact Paul@LaunchConsultingInc.com
Form more information on requirements for filing, visit the IRS website using the link provided below: