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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

---------- 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.

FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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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