Does your LLC have to issue 1099 forms to your freelancers?

You hire a designer, a developer or a virtual assistant and, in some forum, someone drops the line that keeps you up at night: "don't forget to send them the 1099". Suddenly it feels like your LLC has one more IRS obligation nobody warned you about. The good news: for most non-resident LLCs, the 1099 almost never applies. The bad news: when it does, you have to do it right and on time.

Let's separate the myth from the real rule. The 1099 doesn't depend on your passport or on where your LLC was formed: it depends on who you pay, where that person works and how you pay them.

What is a Form 1099 really, and what is it for?

A Form 1099 is an information return: it's not a tax, it's a notice to the IRS that your business paid money to someone. The one that matters for freelancers is the Form 1099-NEC (Nonemployee Compensation), which reports what you paid to independent contractors. You pay nothing by issuing it; you just report. The person who receives it is the one who uses that figure on their own return.

The IRS logic is simple: it wants to match what you say you paid with what the contractor says they earned. That's why the duty to issue the 1099 falls on the payer —your LLC— not on the person getting paid.

The payer rule: who issues and who doesn't

A US trade or business —and that includes a foreign-owned LLC— must issue a 1099-NEC when it pays a contractor for services. But there are three filters that, in practice, leave almost every non-resident's freelancer out. If your payment doesn't pass all three, there's no 1099 to issue:

1. The contractor is a US person (citizen, resident or US entity).
2. You paid them $2,000 or more in the year for services.
3. You paid them directly (transfer, ACH, check), not through a payment platform.

The distinction that changes everything: US vs foreign contractor

This is the point almost nobody explains well. Form 1099 is a form for US persons. If your freelancer is foreign and works from outside the US —the designer in Argentina, the developer in India, the editor in Spain— that payment is foreign-source income and is not reported on a 1099.

Instead, what you ask that foreign contractor for is a Form W-8BEN (if an individual) or W-8BEN-E (if a company). That form documents they're foreign and that the work was done outside the US. You keep it in your file; it isn't sent to the IRS. No 1099 and, in the typical case of services performed abroad, no withholding.

If a foreign person performs the service inside the US, the story changes: that is US-source income, it may carry withholding and it's reported on a Form 1042-S, not a 1099. But the typical remote freelancer doesn't land there.

The $2,000 threshold and which payments count

The 1099-NEC only triggers at $2,000 per contractor per calendar year, adding up all payments. That threshold went up: the One Big Beautiful Bill Act raised it from the historical $600 to $2,000 for payments made on or after January 1, 2026 (2025 payments, which you report in early 2026, still use the old $600 threshold; from 2027 on, the $2,000 figure is adjusted for inflation). Below the threshold there's no duty to issue it, although the contractor still has to report their income on their own.

And note: the 1099-NEC is for services, not for everything. You don't issue it for buying physical products, nor for paying a corporation (with narrow exceptions like legal fees). For a freelancer —design, code, writing, consulting— what counts is the payment for their work.

The 1099-K trick: if you pay via Stripe or PayPal, you don't issue it

Here's the shortcut that saves a lot of paperwork. If you pay your freelancers by card or through a TPSO payment network —PayPal, Stripe, card processors and the like— those payments are reported by the platform itself on a Form 1099-K. You should not also issue a 1099-NEC for them: that would report the same money twice.

The practical rule goes by mechanism, not brand. The 1099-K exclusion applies only to payments by card or through a TPSO network (the ones above). If the money went out by bank transfer, ACH, check or wire —even if you sent it through a service like Wise or Payoneer, which for an ordinary transfer act as a plain bank, not a TPSO— it's still a direct payment: the 1099-NEC falls on you if the contractor is a US person and crosses $2,000.

What you ask for BEFORE paying: W-9 and W-8BEN

The classic mistake is realizing in January, when you can no longer reach the contractor. The clean move is to ask for the form before the first payment:

• Form W-9 — from every US contractor. It gives you their legal name and tax number (SSN or EIN), which you'll need for the 1099.
• Form W-8BEN / W-8BEN-E — from every foreign contractor. It documents their non-US status and frees you from the 1099 for that payment.

With the right form on file from the start, in January you know exactly who (if anyone) you have to issue a 1099 to.

Deadlines and how it's filed

If you do have to issue a 1099-NEC, the date is strict: January 31, both to give the copy to the contractor and to file it with the IRS. To generate them you need your LLC's EIN (you've had it since formation) and the W-9 data. It's filed electronically or by mail depending on volume, and an accountant or payroll/bookkeeping software automates it without drama.

Does my non-resident LLC that only hires foreigners have to issue 1099s?

In the most common case —a non-resident LLC subcontracting freelancers outside the US— the answer is no. You issue no 1099; you just keep each one's W-8BEN. The 1099 obligation really shows up when you start paying directly to US contractors above $2,000 a year. If your whole team is remote and international, your 1099 paperwork is, almost always, zero. To see where this fits in the entity's overall operations, there's the how your LLC works guide.

Do I need an EIN to issue 1099 forms?

Yes. The 1099 carries the payer's tax number, and for an LLC that number is the EIN. If you formed your LLC with us you already have it, so it's not an extra step: it's the same number you use to open the bank account and file Form 5472. What you add the day a 1099 is due is just the contractor's data (their W-9) and filing on time. The 1099 is just one piece of the paperwork depending on your activity: if you sell to US customers you may owe sales tax, and depending on what you do and where, some license or permit. If you want to size up all these maintenance costs and filings, we break them down in the real cost of your LLC.