If the graphic designer did work for you in your trade or business, then you may need to send her a 1099-Misc depending on how her LLC is formed.
If you do not have a trade or business, you do not need to send her a 1099-Misc.
You do need to send 1099s to single-member limited liability company (or LLCs) or a one-person Ltd.
But not an LLC that’s treated as an S-Corporation or C-Corporation. Here’s another way to remember:
- Sole proprietor = Do send 1099
- Unincorporated contractor or partnership/LLP = Do send 1099
- An LLC that elects treatment as an S-Corporation or C-Corporation = Do NOT send 1099
Alas, there are some exceptions to this rule. You still need to issue 1099s for:
- Attorney’s fees even if the lawyer is incorporated
- Gross proceeds paid to an attorney (such as for legal settlements)
- Payments to for-profit medical care providers
The IRS says that only businesses need to report more than $600 paid for work done.
