An LLC partnership does not receive a 1099 from itself — it receives a Schedule K-1 instead

When an LLC has two or more members and does not elect to be taxed as a corporation, the IRS treats it as a partnership by default. In this structure, the LLC itself does not pay income tax. Instead, profits and losses pass through to the members' personal tax returns. The LLC files Form 1065 (U.S. Return of Partnership Income) with the IRS. Each member then receives a Schedule K-1, which shows that member's share of the partnership's income, deductions, credits, and losses. You report the K-1 amounts on your own Form 1040. This is fundamentally different from a 1099, which reports non-employee compensation paid to an outside contractor. You will not receive a 1099-NEC or 1099-MISC from your own partnership-taxed LLC, even if you are the only active member doing the work.

The confusion usually comes from mixing up two separate situations: whether you receive a 1099 from your own business, and whether you issue a 1099 to someone else who works for your LLC. Those are different questions with different answers.

Key Takeaways

  • A multi-member LLC taxed as a partnership does not issue 1099s to its members; instead it files Form 1065 and issues Schedule K-1s to each owner.
  • An LLC taxed as an S corporation must issue a W-2 to owners who work in the business and take a salary, not a 1099.
  • An LLC that pays independent contractors (not members) must issue a 1099-NEC if the contractor earned over $600 in a calendar year.
  • A single-member LLC taxed as a sole proprietorship does not receive a 1099 from itself; the owner reports business income directly on Schedule C.
  • The form you receive depends on your LLC's tax election and your role — whether you are an owner, an employee, or a contractor.

How Schedule K-1 replaces the 1099 for partnership members

The Schedule K-1 is the standard form for reporting partnership income to members. It shows your share of ordinary business income or loss, separately stated items like capital gains or charitable contributions, and your share of any credits the partnership claimed. The K-1 is issued to you by January 31 of the year following the tax year in question.

You use the K-1 to complete your own Form 1040. The specific line depends on the type of income — ordinary business income typically goes on Schedule E (Supplemental Income and Loss), while capital gains or losses go on Schedule D. Self-employment tax is calculated on your K-1 income using Schedule SE, just as it would be for a sole proprietor.

The key difference from a 1099-NEC: a K-1 reflects your ownership stake in the partnership's profits or losses, not a payment for services rendered. Even if you do all the work, you receive a K-1 because you are an owner, not a contractor.

S corporation-taxed LLCs require W-2 wages, not 1099s

Some LLC owners elect to have their business taxed as an S corporation by filing Form 2553 with the IRS. This election changes how the business reports income and how it pays you. In an S corporation-taxed LLC, if you work in the business, you must be on the payroll and receive a W-2 for your salary. The LLC cannot issue you a 1099-NEC for that work — the IRS requires S corporation owners who perform services to take a "reasonable salary" as W-2 wages.

Any profit left after paying that salary can be distributed to you as a dividend, which you report on your K-1, but the work itself must be documented as wages. This rule exists to prevent owners from avoiding self-employment tax by taking all their income as distributions rather than wages. If you own an S corporation-taxed LLC and work in it, expect a W-2, not a 1099.

Single-member LLCs and Schedule C reporting

A single-member LLC is taxed as a sole proprietorship unless you elect otherwise. You do not receive a 1099 from your own business. Instead, you report all business income and expenses directly on Schedule C (Profit or Loss from Business) attached to your Form 1040. Self-employment tax is calculated on Schedule SE based on your Schedule C net profit.

If you hire someone else to work for your sole proprietor LLC — a contractor, not an employee — and you pay them $600 or more in a calendar year, you must issue them a 1099-NEC. But you do not issue a 1099 to yourself. The distinction is straightforward: owners report their own income directly on their tax return; contractors receive a 1099.

When your LLC must issue a 1099-NEC to outside contractors

Regardless of your LLC's tax structure, if you pay an independent contractor (someone who is not an owner or employee) $600 or more in a single calendar year, you must issue that person a 1099-NEC by January 31 of the following year. This applies to partnership-taxed LLCs, S corporation-taxed LLCs, and sole proprietor LLCs equally. You must report the contractor's name, address, and tax ID (usually their Social Security number or EIN), and the total amount you paid them in the year.

The $600 threshold is federal. Some states have lower thresholds or different rules, so check your state's requirements as well. A common mistake is issuing a 1099-NEC to someone who should have been a W-2 employee. If someone works regularly under your direction and you control how they do the work, they are likely an employee, not a contractor, and should receive a W-2 instead.

C corporation-taxed LLCs and Form 1099-DIV

If you elect to have your LLC taxed as a C corporation, the LLC itself pays corporate income tax on its profits. When the LLC distributes money to you as an owner, you receive a Form 1099-DIV (Dividends and Distributions) reporting that distribution, not a 1099-NEC. If you also work in the C corporation-taxed LLC and receive a salary, you get a W-2 for that salary. The 1099-DIV is only for distributions of after-tax profit to shareholders.

This structure is uncommon for small LLCs because of the double-taxation issue — the LLC pays tax, and then you pay tax again on dividends — but it does happen, usually for specific business or liability reasons. The 1099-DIV is reported on Schedule B (Interest and Ordinary Dividends) or Schedule D (Capital Gains and Losses) depending on the type of distribution.

What to do if you received a 1099 from your own LLC

If you received a 1099-NEC or 1099-MISC from your own LLC, something went wrong. The LLC should have issued a K-1 (if it is partnership-taxed), a W-2 (if you are an employee or S corporation owner), or nothing at all (if it is a sole proprietor LLC). Contact the LLC's accountant or the person who prepared the return and ask them to correct it.

You will need to file an amended return if you already filed based on the 1099. Do not report 1099 income from your own business on your personal return if you are an owner — that creates duplicate reporting and will trigger IRS notices. If the LLC refuses to correct the error or goes out of business, you may need to file Form 1040-X (Amended U.S. Individual Income Tax Return) and explain the situation in a note to the IRS.

Frequently Asked Questions

Do I report my K-1 the same way I report a 1099?

No. A K-1 goes on Schedule E (Supplemental Income and Loss) or directly into your Form 1040 depending on the type of income. A 1099-NEC goes on Schedule C or Schedule 1. They are reported in different places and treated differently for self-employment tax purposes.

If I am the only member of an LLC, do I get a 1099?

No. A single-member LLC is taxed as a sole proprietorship by default, and you report income directly on Schedule C. You do not receive a 1099 from your own business. If you hire contractors, you issue 1099s to them, not to yourself.

Can I issue a 1099 to an LLC member instead of a K-1?

No. Members of a partnership-taxed LLC receive K-1s, not 1099s. If someone is a member, they are an owner, and the partnership must report their share of income on a K-1. A 1099-NEC is only for independent contractors who are not members.

What if my LLC paid me but did not issue a K-1 or 1099?

You still must report the income on your tax return. If you are a member of a partnership-taxed LLC, request a corrected K-1 from the LLC. If the LLC refuses or goes out of business, you may need to file an amended return showing the income based on your own records and explain the missing K-1 in a note to the IRS.

Do I need to issue a 1099 to an LLC that I hired as a contractor?

Yes, if you paid the LLC $600 or more in a calendar year. Use the LLC's EIN (not a Social Security number) and issue a 1099-NEC to the LLC's address. The LLC will then report that income according to its own tax structure.