Updated: Dec 20, 2022
As a small business, you may need to issue or collect Form W-9 to your clients, vendors or hires. When you are hired as an independent contractor, a freelancer, or self-employed business owner, the business you work with may request you to complete and send them a W-9. This allows them to report the payments they made to you and know if you are subject to backup withholding. If your business hires other independent contractors or self-employed workers, you should request a completed W-9 form from them as well. Let's look at little closer...
In general, Form W-9s are used in business to business transactions where more than $600 is paid for labor and services per calendar year. (While the $600 threshold is a requirement, it may still be a good idea to collect a a Form W-9 from your vendors up front as part of your on-boarding process.)
This form is used to verify you are a legitimate business and are paying your taxes.
You will provide your identifiable information on the W-9 about you and/or your business so it can be used to report income paid to you as a self-employed business.
Information collected includes your name, address and taxpayer ID (Social Security number for individuals and EIN numbers for businesses).
TIP: Once you complete your form, you can use it multiple times. You do not need to complete a new Form W-9 for each business you send it to but if they request a hard copy you will need to print, sign and mail. Scanning your signed Form W-9 and sending it digitally to new vendors makes it easier for you.
When do you need to issue a W-9?
The person or business paying you is responsible for requesting a Form W-9 from you. You then complete a W-9 and send it to the business that made the request. The information on the W-9 you issue is used by the requesting person or business to prepare their tax forms and determine if federal tax withholding is necessary on the payments they provide to you.
If you receive payments for services as an independent contractor, you will usually need to submit a Form W-9.
When do you need to collect a W-9?
If you work with an independent contractor or freelancer that you will be paying, you should collect a Form W-9 before starting any business. Without this form you may be required to pay withholding taxes on the money you pay to them.
For the most up to date information on Form W-9, please visit the IRS website.
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