Resource: Form W-9
Why YOU Should Care:
If you pay contractors to perform work for your company, you must keep track of how much you pay them over the course of the year. If you pay anyone $600 or more in one year, you are required to issue a Form 1099-MISC reporting the amount both to the contractor and the IRS.
Forms 1099-MISC for work performed in 2013 are due to the contractor by January 31, 2014. This date comes quickly in the new year and often business-owners find out too late that they are missing information from the contractor required to complete the Form.
Using Form W-9
To properly complete a Form 1099-MISC to report to your contractor and the IRS the amount paid over the year, you need your contractor’s full name, address, and tax identification number (commonly either a Social Security Number or Employer Identification Number). People can be understandably leery of providing Social Security Numbers, so requesting they complete a Form W-9 – an official-looking form designed by the IRS – can increase willingness of your contractors to give you all the information you need.
Is a Form W-9 Required?
No. You are not required to issue a Form W-9 to your contractors. However, you are required to issue Forms 1099-MISC to all contractors paid $600 or more, so I strongly recommend using the Form W-9 to gather all contractor information to avoid issues in January.
If you issue Forms W-9 to all your contractors before they start working for your company, completing and issuing Forms 1099-MISC when needed will be a breeze.
(To make it even more of a breeze – have me prepare your Forms 1099-MISC for you!)