What does this mean to you?
You should be getting an updated W-9 from each person, contractor, or business (aka vendors) that you pay via cash, check or Zelle® before you make your next payment. Here is a link to the latest version of form W-9 for your convenience: https://www.irs.gov/pub/irs-pdf/fw9.pdf
The best practice is to obtain the W-9 forms now before you make your next payment, so that you have the most up to date information available. Vendors that are seeking payment from you are more inclined to provide the form now to receive their payment.
Good business practice is to obtain an updated W-9 each year from all your vendors. Vendors’ names change, business classifications change and addresses change.
Once your vendor sends you a form, please review the forms you receive to make sure that they are complete, signed, and legible. Then keep IRS form W-9 in a folder until the end of the year. We will reach out to you in early January regarding the 1099’s that you need to file.
Why get a W-9?
The IRS requires a form 1099 to be issued to certain vendors working for your business.
You will need these forms in early January to determine which vendors need to receive form 1099 from your business by the January 31st deadline.
Some (but not all) examples of vendors who may need a 1099 issued to them are:
- services performed by any person or business who is not your employee (does not receive a W-2) such as a handyman, landscaper, website designer etc.
- payments to an attorney
- payments to a financial advisor or bookkeeper
- payments of commissions
- your landlord for rent paid
- prizes and awards
- interest paid to someone for a loan
Avoid Penalties
W-9’s from your vendors protects you and your business from substantial IRS fines and penalties.
Please note, the penalties listed below for the prior tax year (2023). The penalties increase each year.
- $60 Per Form for 1099’s filed between 02/01/2024 – 03/02/2024.
- $120 Per Form for 1099’s filed between 03/03/2024 – 08/01/2024.
- $310 Per Form for 1099’s filed after 08/01/2024.
- $630 Per Form for intentional disregard (no filing)
If you have any questions regarding form W-9 – please call our office.
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