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Your billing info is updated. Billing info update failed. Search Routable Blog. What is an IRS form W-9? This is the title under which the person performs their service or labor. It may simply be the legal name of the person or a more formal business name or trade name DBA name.
That distinction is dependent on whether or not a business license is in place. The need for a business license will vary from region to region but is likely determined by level of liability and amount of annual earnings. Providing the correct taxpayer identification number on this form is absolutely critical.
When a vendor is working under their legal name, a social security number is provided on the W Registered businesses, however, are assigned identifying numbers. The basic format of the number is 9 digits long.
However, it can be written in a 16 digit format, the additional 7 seven digits refer to Business ID and Business Location. These additional numbers are most relevant to businesses that have multiple locations. You should keep the completed and signed W-9s on file to send to payers or customers, if requested. Only corporations are exempt from reporting and Form W This means your LLC must complete a W-9 if it's requested.
If you don't comply, any payments your LLC received may be subject to backup withholding. LLCs can choose between several types of classification for federal taxation. Others provide default taxation that depend on the LLC's members. Your classification will need to be indicated on Form W Your C-corporation W-9 will need to be completed in the first 75 days of your business start or in the first 75 days of the new tax year, if you've already been in business for that time.
If you are concerned about giving out your social security number and personal contact information, you can register as a business to avoid sending out personal details. Either option is equally acceptable, though a registered LLC or S-Corp looks a little more professional on a W-9 than a sole proprietorship.
You can use the same form multiple times. Rather than sending off an original make copies, scan a digital version. This will help you send it digitally when requested. That is up to you. I am a serial entrepreneur with several businesses behind me. One of which was a party and event planning business in Denver. For one event, we worked with a shuttle service to safely drive party guests to and from our big holiday bash. After a few interactions with the shuttle driver, I became concerned he was not doing everything on the up-and-up as far as taxes and regulations, but we were too far in to switch vendors.
He pushed back on the requirement, but eventually relented and gave us that all important form. While you probably have enough to keep you busy on your plate, the best choice is to get a form from every single vendor. Alternately, you can use a vendor payment system where they customer enters W-9 information as part of the vendor on-boarding process. It is up to you, but I would err on the side of getting a W-9 for every vendor, not just when required.
Both sides of the transaction have motivation to complete and W-9 for every vendor relationship. As a customer, the W-9 protects you from paying illegal vendors and possible implications with money laundering, tax evasion, or worse.
As a service provider, the W-9 tells your client you are an upstanding business that is safe to pay. Just like when I was working with a sketchy shuttle driver in Denver, you should always follow your gut when it comes to W-9 forms. So take the steps to prepare ahead of time by sending W-9s when needed. Next, request them for every new vendor. Not to mention your business can pay your vendors without worry. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday.
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