Form W-9: Do I REALLY Need It?

Chances are as a small business owner you’ve heard of Form W-9...and if not, there’s good news – I’m about to tell you all about it 😉. Maybe you’ve been requested to provide it to a customer, or maybe I’ve asked you to get one for a contractor you’ve paid.  But do you understand why you’re requesting this form (or why it’s being requested of you), and what its purpose is?

The Form W-9 essentially is an informational form that helps with Form 1099-MISC processing (that’s our primary focus here at least). The W-9 lists the person’s/company’s name, entity type, address, taxpayer identification number (either SSN or EIN), and signature certification. This gives all of the necessary information needed to file a Form 1099-MISC, other than the actual dollar amount paid to the person/company during the year (which should be available in your accounting records). It also certifies that the person/business is not subject to backup withholding, which essentially means that you as the payer would not be required to withhold 24% of their payments and send to the IRS for this backup withholding.

When should you ask for a completed Form W-9? Basically, any time you think you might be required to file Form 1099-MISC. There will be a separate blog post on more specifics on Form 1099-MISC, but in short, if you pay a person/business $600 or more during the year (cumulative) for services or rent for your business via cash, check, or ACH/wire/bank transfer, you could be required to file Form 1099-MISC. If you don’t file a Form 1099-MISC on someone you should have, you could be prone to IRS penalties. Therefore, you’ll need to get a completed Form W-9 from that person/business to make sure you have the necessary information to file Form 1099-MISC (as applicable). The due date for 1099-MISC filings are generally January 31; with such a quick turnaround time after year-end, that’s why it is so important to stay on top of Form W-9 requests throughout the year. 

Furthermore, best practices say to have a Form W-9 filled out PRIOR to even paying for the work. That way, you can’t get burned later if the contractor refuses to supply it, but you’ve already met the 1099 requirement threshold. Also, it helps shield you from liability if there should have been backup withholding withheld and remitted, but you didn’t withhold it due to the completed Form W-9 for that person/company being signed by them certifying they weren’t subject to it (HUH?! Don’t worry – just get the W-9).

Don’t have a blank Form W-9 handy, or does your contractor give you something else in lieu of it? Technically the IRS says you can use a substitute Form W-9 as long as its content is substantially similar to the IRS’s official form, and it satisfies certain certification requirements (which I won’t get into) – however, we highly recommend you just use the IRS Form W-9 to be safe.

If you have some people/companies that you are still needing to get a W-9 from, I encourage you to request them ASAP to make January 1099 processing smoother and less stressful. 😊 And if we file your company’s 1099-MISCs, go ahead and get us a copy of those completed Form W-9s as well – we keep them in our secure FileCabinet server in perpetuity.

You can download a blank copy of Form W-9 directly from the IRS website at https://www.irs.gov/pub/irs-pdf/fw9.pdf and it also includes general instructions on filling out the form.

As always, feel free to reach out to us at Arndt & Company with any questions!

Thank you!

Kayla Weaver, CPA

Disclaimer: This article is not intended to be tax advice, and it does not cover all possible scenarios and/or rules within the tax code. Please contact your CPA for further information or clarification.