As a small business owner, you should be aware of your potential filing obligations with the Internal Revenue Service in addition to income tax returns. If you rent or lease business property, such as an office, you may need to file a 1099-MISC information return to report the annual rent payments you make. This obligation to file a 1099-MISC remains the same regardless of whether the landlord is a limited liability company, an individual or some other type of business entity.

1099-MISC Rent Reporting

Filing a 1099-MISC applies only to the rent you pay for business property – not your personal property. Moreover, a 1099-MISC isn’t necessary unless you pay $600 or more in rent during the year. This $600 requirement applies to total annual rent payments – not monthly. For example, if you rent a small office in downtown Phoenix for $200 per month, your obligation to file a 1099-MISC will kick in after you pay the third rental payment for the year.

Obtain W-9 Form

When your total rent payments require a 1099-MISC, you will first need to request a W-9 form from the LLC that leases the property to you. A W-9 form is necessary because it allows you to collect information about the LLC that the IRS requires to be reported on the 1099-MISC. Otherwise, the IRS wouldn’t be able to match the rental income to the LLC. You don’t need to file the W-9 with the IRS, but you should review it for accuracy before preparing the 1099-MISC. If your landlord is a single-member LLC that’s a disregarded entity for tax purposes, meaning the IRS treats the member as a sole proprietor, the member’s Social Security number or an employer identification number it has obtained unrelated to the LLC should be listed along with the owner’s legal name. For all other LLCs, the business name and its EIN should be reported.

Preparing the 1099-MISC

Filling out the 1099-MISC after the close of the tax year is fairly straightforward. You will transfer the identifying information from the W-9, such as the LLC’s name or member’s name, the address and the relevant Social Security number or EIN. Then after calculating the amount of rent you paid during the year, you will report the total in box 1.

Filing Deadlines

Since the IRS requires that you furnish a copy of the 1099-MISC to the LLC by Jan 31 in the year after the relevant tax year, you’ll need to have these information reporting tasks completed rather quickly. However, the IRS doesn’t require its copy of the 1099-MISC until the last day of February, or if you file electronically, until April 1.