I am a wedding planner who is working on behalf of a venue to book/sell weddings for them.
The agreement is, I handle the sale and contract and then receive the deposit. I then pay the venue their normal deposit (my cut is the difference) example: the venue costs $3000 to rent and I charge a customer $4000, so I keep $1000 for my planning services and pay the venue the other $3000 (their normal deposit).
With this arrangement, it’s a little backwards because I am kind of like the contractor receiving the initial monies from the client, and I then pay the venue their normal fees.
Is my payment to the venue considered a business expense, or do I need to issue a 1099 to the venue?
It depends- if the venue is incorporated (you can ask them if you are not sure) then you would not issue them a 1099-MISC. You would enter the payments to them as a business expense.
For more information see the IRS website at Am I Required to File a Form 1099 or Other Information Return?
If you have any other specific questions, please ask us!
When you say incorporated, do you mean any business type (LLC)?
I know that they are an LLC, but I’m not sure if it is single member or partnership.
An LLC can be sole proprietor (single member), partnership, or corporation so the LLC designation alone is not indicative- it is always best to ask if not 100% sure. You can get a copy of a W9 from the IRS website and give it to them- if they do not normally get 1099-MISCs because they are a corporation, they will let you know.
The number one reason you must be diligent and at least ask (and not assume) is that if you should have issued the 1099-MISC and did not, you can be fined and it is possible (but not likely) that the IRS can deny the deduction so you would have to pay the taxes on the entire deposit.