What’s The Purpose of a W-9?
As a small business owner, chances are you’ve paid an individual or business for their services during the year. Anytime work is performed for your company by a non-employee you need to have them fill out a W-9.
But why?
Each year you are required to report all payments made for services to non-incorporated businesses or individuals – i.e. LLC’s, LLP’s, Sole Proprietors. Some examples of this might be accounting or legal services, consulting, writing, contract labor, research, or graphic design work.
How do you know if they are incorporated or not? You guessed it. By their W-9!
The W-9 form provides you or your bookkeeper with the tax election information in order to issue their 1099 if they meet the requirements and annual threshold (currently $600).
Technically you should collect a W-9 from ALL of your vendors BEFORE providing payment for the first time, but the latest time frame for collecting them is November – December so that your bookkeeper can input all information in time to file your 1099’s by the January 31st deadline.
Not only is collecting and keeping W-9’s on file a requirement, it allows companies to show the IRS that they do not owe payroll taxes on the money paid for the various services.
For further details or assistance with collecting & entering W-9 forms along with 1099 filings contact Tiger Accounting & Bookkeeping Services.
