1. Core Planning to IAR

• Regulations require RIAs disburse client fees as 1099 payments to individual IARs.
• Core Planning (RIA) engages the individual IAR (advisor) for services.
• The RIA pays the advisor directly as per the agreement, issuing a 1099 form at the end of the year for tax reporting.
• Since the advisor’s LLC is disregarded for tax purposes (if it's a single-member LLC and no election for S-Corp or C-Corp status has been made), the income is considered as being earned by the individual owner.

2. Advisor to LLC Bank Account

• Even though the payment is made to the individual advisor, that advisor can deposit earnings directly into the LLC’s bank account (or another designated account in the LLC’s name).
• The advisor can label this transfer as income received by the LLC for accounting purposes, keeping track of all payments that belong to the LLC.

3. LLC Income and Owner Distribution

• The LLC holds the income, and the advisor can decide to make personal withdrawals as distributions.
• These withdrawals are not considered additional taxable income to the advisor since the LLC’s profits are already passed through and taxed on the advisor’s personal tax return.

Tax and Reporting

• Core Planning issues a 1099 form to the advisor (under the individual’s Social Security Number or Tax Identification Number).
• The advisor files taxes as an individual, reporting the LLC’s income on Schedule C of their personal tax return.

Summary of cash flow:

• Client → Core Planning → IAR (1099) → LLC (Bank Account) → Owner (Distributions).