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Tax Law (Questions About Taxes)/Tutoring Business and 1099


QUESTION: I am starting my own tutoring business.  I will be the sole proprietor.  Letís call my business A+.  I am paid directly by clients for my services.   There is another business (letís call them B+) whose services I use to help me find clients.  If a client finds me through B+, I must pay a fee to this business owner.  Clients also give me a one time fee that I must pass on to B+.  Currently I only have clients that I have found through B+.  
So, letís follow the money as an example.
A+ (myself) receives: one time fee of $20.00 + $60.00 per hour for 1 hours: $80.00
A+ has expenses payable to B+ of the one time fee $20.00 plus $10.00 / hour for 1 hours: $30.00
So I have a net profit of $50.00, but my gross is $80.00.  
My question is, if the fees and hourly payments to the other company (B+) are more than $600.00 / year, do I need to give them a 1099?  The fees are payable to a LLC for his services.  I am very new at this and any help would be appreciated.
Thank you!!!

ANSWER: Maxwell,

Thanks for your question.

Because B+ is an established business, you do not need to issue a 1099 to the business since you are making payments to the business.  If you were making payments to an individual, a 1099 should be issued.

Hope this helps.

John Stancil, CPA

[an error occurred while processing this directive]---------- FOLLOW-UP ----------

QUESTION: Everything I read says that if I pay for services from an LLC that is owned by a single person (which it is), that I DO have to issue a 1099.  Does this information matter?

Thank you so much!

You are deallng with a situation in which practice and the law differ.  You are correct, the law says you must issue him a 1099, but very few people do, in this situation.

If the LLC is not taxed as a corporation, the law states you should issue a 1099.  However, you may or may not know how the owners have chosen to have the LLC taxed.

Hope this helps, and sorry for the misunderstanding.

John STancil, CPA  

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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