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.
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.
Do you pay individuals to provide services for your business? If so, it’s good to know the IRS’s point of view (IRS Classifications) so you can assess the situation. Even if your contractors are only working a few hours a week or month, or are seasonal there is a good chance you have not classified them correctly.
There are many online resources on this topic but here are few quick requirements:
- Do you instruct the worker about when, where and how to work? – EMPLOYEE
- Do you train the worker? – EMPLOYEE
- Do you provide tools or equipment? – EMPLOYEE
- Does he/she do the work on your premises? – EMPLOYEE
- The worker is free to work when and for whom they choose – CONTRACTOR
- The worker hires, supervises and pays their assistants – CONTRACTOR
- The worker makes their services available to the general public – CONTRACTOR
- The worker provides their own tools, equipment or facilities to provide the service – CONTRACTOR
Do you need to re-classify someone as an employee or set-up payroll? Do you need to collect the appropriate forms for hiring and paying Independent Contractors or need to file 1099’s?
Tiger Accounting & Bookkeeping Services can assist with these needs!
What’s the value of a bookkeeper?
I personally know a handful of independent contractors who do work for various clients throughout the year, then visit their CPA (Certified Public Accountant) come tax season. They give their CPA a stack of receipts along with a personally calculated income amount. Depending on the type and size of your business this may work for you – especially if you don’t have any plans to grow. But, if you’re a small business owner with employees, contractors, or maybe just yourself and you aren’t able to keep up with your record keeping then a Bookkeeper can be a valuable asset.
What is your time worth?
Chances are you don’t know how to properly set-up your books along with keeping them accurate. If the books are not managed correctly your reports will not provide you with truthful information about your business.
Here are a few quick reasons you should consider hiring someone to “keep your books” as we call it:
- Staying organized
- Ability to provide financial statements
- Helps you plan for large cash expenses
- Helps you avoid interest & penalties
- Makes filing taxes easier & less expensive
Remember, the balance in your bank account does NOT reflect the status of your business. A bookkeeper can quickly and properly help you get organized and stay organized while you focus on what you know best – your business!