USA 1099 when bill paid by someone else?

[Angie]

I have some clients who started up a company last year. In the first few months, the owners paid some of the business bills (primarily rent) out of their personal bank accounts because they didn't have blank business account checks yet. We've documented all the expenditures and paid the owners back out of the business.

My question is: when a business bill is paid by someone other than the business, should a 1099 still be issued by the business to the vendor?

 

[Tyson]

To answer your question in general terms, yes. But in the case you described the one who paid the bill was the owner of the business. The business can not pay its owners via 1099, as far as I am aware.

How is the business structured? That will determine how the transaction should be classified and its effect on the business.

 

[Angie]

The business is a law firm (Professional corporation). We classified the amounts paid by the owners as loans to the firm, and paid them back to the owners. My question is, if the owner paid the rent for 2 months on behalf of the business, should the business still include those 2 months of rent on the 1099 it sends to the landlord for the year?

 

[Tyson]

Oh I see. Sorry, I misunderstood your question.

I'm not 100% sure, but I would think yes. The payments were made by an employee acting on behalf of the corporation.

 

[Angie]

Thanks Tyson. That's what I was thinking, but I was hoping someone else followed my line of thinking.

I'm also assuming that since when the company pays someone via CC it doesn't need to issue a 1099, that if the employee acting on behalf of the corporation paid someone via CC the same rules would apply and a 1099 would not be required (only when paid via check/cash.) Agreed?