Do LLCs Get 1099s? What Your Therapy Practice Should Check
Last April, 3 clinicians at a practice I work with asked the same question: where's my 1099?
They didn't get one because the practice didn't send one. And the practice didn't send one because each clinician's W-9 had a corporation box checked.
Corporations generally don't get 1099s. So the practice read the W-9s, crossed them off the list, and moved on. That's what the forms said to do.
But all 3 were single-member LLCs. They should have checked Individual/sole proprietor. Each of them needed a 1099, and nobody caught it until they sat down with their tax pros.
And the penalty for a missing 1099 lands on the practice, not the clinician.
So, do LLCs get 1099s? It depends on how the LLC is taxed. A single-member LLC with no tax election usually gets one. An LLC taxed as an S corp or C corp usually doesn't. The business name won't tell you which one you're looking at. The W-9 will, if it's filled out right.
Why "LLC" feels like the answer to the 1099 question
If you've spent any time learning about 1099s, you've probably heard that corporations are generally exempt from receiving certain forms.
It's understandable that you might see LLC in a vendor's name and assume the same rule applies. But an LLC isn't a federal tax classification by itself.
An LLC is a state law thing. You register it with your state. The IRS doesn't have a tax box called "LLC."
For federal tax purposes, an LLC may be treated as a disregarded entity, a partnership, or a corporation, depending on how many owners it has and whether it elected to be taxed as a corporation.
A single-member LLC with no election is disregarded. The IRS taxes it exactly like a sole proprietor. Same Schedule C, same SSN. And that vendor gets a 1099.
The quickest way to sort it out is to ask what form the business income goes on at tax time:
| Their tax return includes | What they are | 1099? |
|---|---|---|
| Schedule C on their 1040 | Sole proprietor or single-member LLC | Yes |
| Form 1065, with a K-1 | Partnership or multi-member LLC | Yes |
| Form 1120-S | S corporation, or an LLC taxed as one | Usually no |
| Form 1120 | C corporation, or an LLC taxed as one | Usually no |
"Usually" is doing real work in those last 2 rows. More on that below. If a vendor doesn't fit cleanly into one of these rows, check with your tax professional before you decide.
You may remember Hannah Abbott from Why W-9s Cause So Many 1099 Headaches for Group Therapy Practices. Her QuickBooks vendor record says Godric's Hollow Counseling LLC. Her 2023 W-9 says Hannah Abbott. I said then that which name was right depended on how her LLC is taxed.
Here's the answer. If Hannah is the only owner and never filed an election, her LLC is disregarded. Her W-9 should say Hannah Abbott on line 1, Godric's Hollow Counseling LLC on line 2, and Individual/sole proprietor on line 3a, with her SSN. And her $2,400 gets a 1099 in her own name.
That's why her old W-9 was probably fine all along. The vendor record was the part that needed a second look.
That's why two vendors whose names both end in LLC can have different reporting requirements.
Two LLCs, two different 1099 answers
Here's how that plays out with 2 vendors on the same list.
Your practice paid Ottery Clinical Supervision, LLC $8,400 this year and Pensieve Practice Consulting, LLC $7,500. Both have LLC in their names, and both are listed that way in QuickBooks Online.
If you were reviewing your vendor list based on business names alone, you might assume they should be treated the same way. But their W-9s tell a different story.
Ottery Clinical Supervision, LLC
Paid $8,400 during the year
Provides clinical supervision for your associate clinicians
W-9: the owner's own name on line 1, the LLC name on line 2, Individual/sole proprietor checked. A single-member LLC with no election.
Result: gets a 1099-NEC, in the owner's name.
Pensieve Practice Consulting, LLC
Paid $7,500 during the year
Provides business consulting
W-9: LLC checked, with "S" written in. The LLC elected to be taxed as an S corporation.
Result: usually no 1099-NEC.
Same 3 letters in the business name. Different answers on the forms.
Pensieve's "usually no" holds up because consulting is an administrative service. That isn't true for every payment to a corporation. Attorneys always get a 1099. And payments for medical or health care services are reportable even when the recipient is a corporation.
For a therapy practice, that second one matters. If you pay a clinical supervisor or clinician whose W-9 shows a corporation box, ask your bookkeeper or tax pro before you skip the form.
You don't need to memorize every possible combination to understand the takeaway: you can't confidently determine a vendor's 1099 requirements from the business name alone.
How to read the W-9 to see how an LLC is taxed
In Preparing 1099s for your group therapy practice, I broke 1099 prep into 5 steps: Identify → Collect → Verify → Resolve → File. This is a close-up on step 2, Collect, and the one line on the W-9 that decides whether an LLC gets a 1099.
The IRS never sees the W-9. You keep it. The IRS sees the 1099 you build from it, and it checks that the name and TIN on that 1099 match its records.
So read it before you file it away. It takes about 10 seconds, and 4 things catch most of the errors:
A corporation box checked with a person's name on line 1. Corporations don't have personal names on their tax returns. Ask.
A corporation box checked with an SSN. Corporations have EINs. An SSN next to a corporation box is a contradiction on its face. This is the check most likely to catch a mistake like the April clinicians'.
The LLC box checked with no letter next to it. Incomplete. You need the C, S or P to know how to treat them.
A business name on line 1 with Individual/sole proprietor checked. Backwards. Line 1 is the person's legal name. The LLC name goes on line 2.
When something looks off, don't guess and don't fix it yourself. Send it back with a note: "Can you take another look at line 3a?" Most vendors fix it in a day.
Which vendors in a therapy practice are likely to be LLCs
Group therapy practices often work with more than just contracted clinicians. Your vendor list might include a clinical supervisor, a marketing consultant, and a billing company, in addition to the contractors providing services to your clients. Several of those vendors might have LLC in their names.
Clinical supervisors are the easy ones to forget, because supervision doesn't feel like a vendor relationship. So are clinicians invoicing through a PLLC that nobody ever classified.
If your year-end review consists of exporting your vendor list from QuickBooks Online and crossing off everyone with LLC in their name, you could overlook vendors who need further review.
What to do when a vendor's W-9 doesn't tell you how the LLC is taxed
A decision that looks obvious at first glance may depend on information you haven't reviewed yet.
When you're unsure, it's better to identify the question than to assume a vendor is exempt based on their business name. Send the vendor 3 questions. They settle it without anyone needing to understand entity law:
Did you file Form 2553 or Form 8832 with the IRS? Those are the forms that elect corporate tax treatment. Most people who filed one remember it, because their tax professional made a whole thing about it.
What form does your business income go on? That's the table above.
How many owners does the business have? One owner and no election means disregarded. Two or more owners and no election means partnership.
If the answers still don't line up with the W-9, that's the point to bring in your bookkeeper or tax professional.
Before you cross an LLC off your 1099 list
If an LLC on your list just turned into a question, start with its W-9. Why W-9s Cause So Many 1099 Headaches covers what happens when the W-9 and your books disagree, and how to catch it before the IRS does.
