Before You 1099, Make Sure You W-9
The IRS requires that you obtain a W-9 from every vendor from whom you purchase $600 in labor and services or $5,000 in direct sales. This form is provided by the IRS and must be completed by the vendor. You have to obtain this form only once from each vendor unless its business information has changed. The Internal Revenue Service requires that you obtain W-9 forms when you make inventory and service purchases from a vendor to create a paper trail that allows the agency to catch vendors who do not report income and to prevent you from claiming illegitimate vendor expenses.
The vendor must send you a copy of his W-9 upon request, or she / he will pay a $50 fine to the IRS.
The IRS requires that you obtain a returned W-9 from a vendor by the time you file your annual tax return. You should not claim a vendor charge as an expense without a copy. You can send a request for the form before making payment, but you should at least send out the form as soon as possible after the purchase of inventory or services to ensure that you have proper documentation in a timely manner.
A vendor will give you his taxpayer identification number, address and business name, and will certify they are not subject to backup withholding when they send you a W-9 form, formally titled “Request for Taxpayer Identification Number and Certification.”
Share-ify allows companies to upload their W-9 so they can share it with all of their “Connections.” This means that rather than looking up each customer, finding their email address and then emailing each and every customer (also managing bounce backs), you can now upload once and allow your Connections to manage who from their company should receive the information from you. That way if your contact has changed positions or left the company, you can feel comfortable that the right person is still receiving the information you are sending.
It can get confusing knowing what documents you need to have on hand when you operate a small business. The Internal Revenue Service form W-9 lists important details needed by you and the Internal Revenue Service for businesses, independent contractors and those you make any kind of payment to, including employees and vendors during the tax year. Share-ify helps you manage this information easier than ever before. To get more help, please email us at [email protected]
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