What determines if someone is required to provide a 1099 for services rendered?’---->A 1099-MISC is a type of tax form, information return form that contains information required to be reported to federal and state tax authorities.It is used to report miscellaneous income, such as income earned as a non-employee, i.e,an independent contractor, as well as fees, commissions, rents, or royalties paid during the last tax year; the IRS requires businesses to submit Form 1099 for each contractor that is paid for services during a year. In general, you must report on any independent contractor you paid more than $599.99 during the year for services rendered. This is the most common category that people run into. A 1099-MISC needs to be issued by your trade or business .You CAN’T issue a 1099MISC just for personal purposes.
“I recently had a conversation with a client that said “I want to work with someone who has a company set up because I don’t want to deal with 1099 stuff”... What exactly does that mean?”---->In general, hiring firms do not have to file Form 1099-MISC when they hire a corporation including S-corp(however, buisnesses or firms that hire LLCs and pay them more than $600 peryear STILL must file Form 1099-MISC with the IRS to report the amount of the payment UNLESS the LLC has opted to be taxed as a corporation). For this reason, some businesses prefer to hire corporations instead of LLCs because they can avoid filing the 1099-MISC form altogether. Firms don't like filing the forms because they often lead to audits.So, he doesn’t need to report payments made to corporations for services, except for payments to corporations that provide legal or medical services.
“I have a LLC and I told him that I invoice each job. He said that was perfect. So I am not sure why that is perfect and why he doesn’t have to deal with 1099 stuff.”---.1099-MISCs are issued to individuals, ICs, I mean, estates, partnerships, disregarded single-member LLCs ( aas disregarded entities, I mean)and LLCs treated as partnerships NOT as either S- or C-corp. So a slong as you hire these entities or ICs as above, you must issue 1099MISC. For example, if you, as LLC, hire him, an IC, an individual ,who has incorporated himself into an S Corporation, then you do not need to issue an 1099MISC to him as long as he is either S- or C-corp. If not, you need to issue him, an IC, a 1099 MISC.
“I have had similar consulting jobs where I invoiced for the job and still received a 1099.”---> Correct Unless you are either S- or C-corp or Unless you a shareholder of either S- or C-corp.
“If I did not have the LLC, would he be required to provide the 1099? What does having a company have to do with the 1099?”-As said above; it depends on his situation. |