Whether an S Corporation Receives a 1099 Form

S corporations do not receive 1099 forms for their own business income

An S corporation itself does not get a 1099 from clients or customers. Instead, the S corp files a Form 1120-S with the IRS, which reports the business's total income and deductions. The individual owners — called shareholders — then receive Schedule K-1 forms that show their share of the company's profit or loss.

This is different from a sole proprietor or independent contractor, who receives a 1099-NEC or 1099-MISC directly from clients. The S corp structure creates a layer between the business income and the individual's personal tax return.

However, an S corporation can receive 1099 forms in a different way: if the S corp itself pays independent contractors or vendors for services, those vendors may send 1099 forms to the S corp. The S corp then reports those expenses on its Form 1120-S.

Key Takeaways

An S corporation files Form 1120-S to report business income, not a 1099 form.
S corporation owners receive Schedule K-1 forms showing their individual share of profit or loss.
An S corp can receive 1099 forms from vendors or contractors it pays, just like any other business.
If an S corp pays a contractor more than $600 in a year, the S corp must issue a 1099-NEC to that contractor.

How S corp income flows to owners on their personal tax returns

When an S corporation earns income, that income passes through to the owners' personal tax returns. Each owner's Schedule K-1 shows their percentage of the company's ordinary business income, capital gains, losses, and deductions. The owner then reports this on their individual Form 1040.

This is called pass-through taxation. The business itself does not pay federal income tax. Instead, the owners pay tax on their share of the profits at their individual tax rates, whether or not they actually took money out of the business.

The S corp must file Form 1120-S by the 15th day of the third month after the tax year ends — March 15 for a calendar-year business. The K-1 forms must be sent to shareholders by the same date.

When an S corp issues 1099 forms to others

An S corporation that pays independent contractors or vendors for services must track those payments. If the S corp pays any single contractor $600 or more during the calendar year for services, the S corp must issue a 1099-NEC (Nonemployee Compensation) to that contractor.

The S corp also files a 1099-NEC summary with the IRS showing all contractors paid. This is filed on Form 1096, which transmits the 1099-NEC forms to the IRS. The important date is typically January 31 of the following year.

Payments to employees do not trigger a 1099. Instead, the S corp issues W-2 forms to employees and files payroll tax returns. Many S corp owners pay themselves a reasonable salary as an employee, which means they receive a W-2, not a 1099.

The difference between receiving a 1099 and filing Form 1120-S

A 1099 form is a report of income paid to you by someone else. It goes to the IRS to show that you received money for services or other income. A sole proprietor or independent contractor receives 1099 forms from clients and reports that income on Schedule C of their Form 1040.

Form 1120-S is a business tax return filed by the S corporation itself. It reports all the business's income and expenses. The S corp does not receive a 1099 because it is not an individual receiving income — it is a business entity reporting its own financial activity.

The Schedule K-1 that S corp owners receive is not the same as a 1099. The K-1 is part of the S corp's tax filing and shows the owner's share of business profit. The owner uses the K-1 to fill out their personal Form 1040, but the K-1 is not a 1099 form.

What happens if an S corp receives a 1099 by mistake

Sometimes a client or customer sends a 1099 to an S corporation by mistake, thinking the S corp is an individual contractor. If this happens, the S corp should contact the payer and ask them to issue a corrected 1099 or to stop issuing 1099s for that S corp's income.

If the S corp receives a 1099 and does not correct it, the IRS may match that 1099 to the Form 1120-S filed by the S corp. This can create confusion in IRS records, but it usually does not cause a problem if the S corp's Form 1120-S is filed correctly and shows the same income.

To prevent this, make sure clients know your business is an S corporation and have your Employer Identification Number (EIN) on file with them. Providing your EIN instead of a Social Security Number signals to the payer that you are a business entity, not an individual.

S corp owners and self-employment tax

One reason business owners choose S corp status is to reduce self-employment tax. A sole proprietor pays self-employment tax on all business profit. An S corp owner who is also an employee pays payroll tax only on the salary they take as an employee, not on the business profit that passes through to them.

However, the IRS requires S corp owners to pay themselves a reasonable salary for the work they do in the business. The IRS does not define "reasonable" with a specific number, but it generally means a salary comparable to what someone in that role would earn in your industry and location.

The profit that remains after the owner's salary is paid is the amount that passes through to the owner's personal return via the Schedule K-1. This remaining profit is not subject to self-employment tax, which is the tax savings that comes with S corp status.

Frequently Asked Questions

Can I receive a 1099 if I own an S corporation?

Not for the S corp's business income. However, if you own an S corp and also do freelance work outside the business, you could receive a 1099 for that separate income. Additionally, if your S corp pays you a distribution (money beyond your salary), that is not reported on a 1099 — it shows on your Schedule K-1 instead.

Do I report my S corp income on Schedule C?

No. Schedule C is for sole proprietors and single-member LLCs. S corp owners report their share of business income on Schedule E (Supplemental Income and Loss) or directly on Form 1040, depending on the type of income shown on the Schedule K-1. The S corp's Form 1120-S does the initial reporting to the IRS.

What if I have an S corp and also work as a 1099 contractor elsewhere?

You can have both. Your S corp files Form 1120-S and you receive a K-1. Separately, if you do contract work for other businesses, they may issue you a 1099-NEC for that income. You would report the 1099 income on Schedule C and the S corp income on your Form 1040 using the K-1 information.

Does my S corp need to issue 1099s to contractors it pays?

Yes, if your S corp pays any contractor $600 or more in a calendar year for services, you must issue a 1099-NEC to that contractor and file a copy with the IRS. Payments to employees are reported on W-2 forms instead, not 1099s.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.