What Is a W-9 Form & How Your Contractors Should Fill It Out

what is a w9 for a business

When you hear that you need to fill out a W-9, you might think it will be a complicated tax form. The good news here is that filling out a W-9 is a fairly short form. Small Business Small business tax prep File yourself or with a small business certified tax professional. Refund Advance You could get up to $3,500 within minutes of filing your taxes. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

The most common reason for backup withholding is if the signer of the W-9 doesn’t have a valid taxpayer ID number or the number is missing. If you submit a W-9 without a valid taxpayer ID, or if your tax ID is invalid, your employer will be required to withhold federal income taxes from your payments what is a w9 for a business at a flat 24% rate. Anyone who does work for a company but is not a full-time employee of the company should fill out the W-9 federal income tax form. Freelancers and independent contractors may have to fill out many W-9 forms, depending on how many companies they work for over the course of a year.

TIN Numbers

You do not need to complete a new W-9 for every client. Just keep a copy of the completed form on hand, and it will be ready to go in seconds if a new client asks for one. Due to federally declared disaster in 2017 and/or 2018, the IRS will allow affected taxpayers an extended filing date to file and pay for their 2017 taxes. You can enter either your Social Security number or your employer identification number .

  • The IRS needs your tax ID number on the W-9 to identify you and connect the income the business pays out to the person or business that earned it.
  • Businesses have a heavy obligation from the IRS to obtain a completed Form W-9 from anyone they pay $600 or more to during the year.
  • If the EIN begins with any other numbers, the company must use a W-9 .
  • When you are hired as a contractor for a business or beginning work as a freelancer, you may be asked to complete a W-9 and provide it to the business that will be paying you.
  • The form requests their tax identification number , which can be the contractor’s Social Security number or employer identification number .

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 . That distinction is dependent on whether or not a business license is in place.

Do Corporations Get a 1099 for Legal Fees?

Since many resident aliens are ineligible for an SSN, they must apply for an individual taxpayer identification number prior to filling out the W-9 form. This form is officially called ‘Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting’. It is used by intermediaries to certify that an individual or business received tax-withholding income on behalf of a foreigner or as a flow-through entity. If you decide to work with a vendor who won’t furnish a W-9, backup withholding is required. Instead of paying the vendor the entire fee, you send 24% of it to the IRS, along with Form 945. You can stop backup withholding when you receive a completed W-9. If you hire a painter to design a mural in your office, you’ll ask them to fill out a Form W-9 before starting the job.

3 Tips to Get W-9s From Vendors in 2022 – The Motley Fool

3 Tips to Get W-9s From Vendors in 2022.

Posted: Wed, 18 May 2022 07:00:00 GMT [source]

The IRS may send you a letter regarding backup withholding. This might have happened if you didn’t report all your interest and dividends on a previous tax return. If you haven’t received this letter, and if you provide your tax identification number to the requester of Form W-9, then you are not subject to backup withholding. If you are subject to backup withholding, cross out item two in part two of Form W-9 before submitting it. The Foreign Account Tax Compliance Act appears on the second prompt of the Exemptions line.


Select the newsletters you’re interested in below. To learn about other payroll forms you may need to do payroll for your business, check out our payroll forms guide. Contractors include independent workers, LLCs, C or S Corporations, Partnerships, and Trusts or Estates. If you need to file a 1099 at the end of the year to report a person’s or entity’s earnings, then you need to have them fill out a Form W-9. As a limited liability company, also known as an LLC. Once your contractor has filled out the W-9, make sure all required sections are filled out.

Examples of changing information include changes in vendor name , address, and taxpayer identification number . A vendor should submit a new W9 to the payer when their legal business form changes.