Working as a freelancer gives you a great chance to do the job you want to get good money for it. The companies you work for also get a lot of privileges when working with independent contractors.
They just pay you money for your job and don’t have to deal with tax withholding. At the same time, they still have to use the info about contractors they work with and the payments they’ve made for accounting purposes. That’s where w9 is required. So, what is a w9? Who should fill it? When you don’t have to use the form?
The main purpose of W9
The form is a standard IRS document. What is a w9 tax form used for? The main reason why freelancers have to fill it is that IRS require certain info for taxation purposes. It includes Taxpayer Identification Number, entity type business name and some other data.
It sometimes might happen that the form is needed for other purposes. You may receive it from your bank or insurance company. It’s OK, in case they don’t already have the info being inquired.
W9 form for business
The main reason why companies ask contractors to fill W9 is cause information it delivers is used for accounting. They’ll need your TIN, name and address to fill 1099-MISC. So, companies won’t send your document to IRS.
If you’ve received w9 and you’re sure you should fill it, don’t send it via insecure channels. Remember that the document includes personal info, which should be save from leaking.
For employees
There is a huge difference between being employee and independent contractor in terms of taxation. W9 is filled only buy freelancers who are responsible for paying taxes on their own. At the same time, employees usually fill W-4. If you work for a company and you’re not sure whether you’re contractor or employee, you’d better check this out. Sometimes companies try to save money classifying you as a freelancer. So, make it all clear before filling any form.
Is it difficult to fill w9?
Actually, the whole process is pretty simple. You just need to fill several fields, put your signature and current date. However, there are somethings to check before you give the info. It’s really important to know whether you’re exempt from backup withholding, is your LLC a disregarded entity etc. It would be really great to get to know about it a bit more before you choose the appropriate option.