Understanding all the IRS tax forms and requirements for a business owner can be overwhelming. One of the tax forms that often confuses people is the W-9. Let’s take a look at what the W-9 form is and when it’s required.

A W-9 is a commonly used IRS form that validates the information of a person or business you hire. Typically a W-9 is used when a business utilizes the services of an independent contractor or freelancer. The company hiring the service may ask the contractor or freelancer for a W-9 which will provide some of their personal information, most importantly, their tax identification number. Asking for this form allows you to validate the business you are working with, ensure they are operating legally, and also helps you to fill out any necessary 1099 forms at the end of the tax year.

If you are a contractor or freelancer and are asked to complete and provide a W-9, you can access the form through the IRS at www.irs.gov. The form requires that you provide your name, address, Tax Identification Number, and a few other identifying details.  Providing this form gives the companies you work with peace of mind that you are a valid business that is operating legally and following required tax laws. When providing this form to a business, ensure that you have accurately completed the information required in the form and that you send the form in a secure way that will not compromise the information it contains.

If you are a business you should know these four things about requesting a W-9:

  1. W-9 forms are only required when you are spending more than $600 in a calendar year on labor or services from an individual or business;
  2. The W-9 forms you receive do not need to be filed with the IRS, but instead should be kept on file and used to help you complete any required 1099 forms;
  3. Requesting a W-9 at the beginning of your working relationship with a contractor or freelancer is the best way to ensure that they are legally authorized to conduct the work you are paying for and provide you with the information you need to complete your business taxes; and
  4. Failing to get a W-9 for work you have contracted out may mean that you are required to pay withholding taxes on the money that you have paid the contractor.

W-9 forms are an essential tool for businesses that are contracting out labor and services. Understanding when and how to use these forms is critical to your business’s tax filing. 

We are here to help you create a solid legal foundation for your business that will allow you to grow and expand with confidence. We have expert attorneys that can assist you with forming your business entity, acquiring an Employer Identification Number, or any other business related legal need. Contact our firm today to schedule a one-on-one consultation with our business law attorneys.

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