Tag: supplier

  • You should never e-mail an IRS Form W-9.

    You should never e-mail an IRS Form W-9.

    E-mail is probably one of the most convenient and easiest ways for us to communicate, however, it is not a secure means of sending information. You should avoid sending sensitive data or information (i.e. a w9 that has your social security number of EIN on it) in an email.

    According to one security expert Dr. Catherine J. Ullman, “Email by default is not and was never intended to be a secure mechanism for sending sensitive data.” Emails can be intercepted by bad actors on the web, and they can easily see any attachments.

    If you can’t email your W9, then how should you share it with someone requesting it from you? You should use encrypted or secure file transmission services, or ask the requester to utilize an online service, such as https://getw9.tax, to collect & store W-9s.

  • What is backup tax withholding?

    What is backup tax withholding?

    When backup withholding applies, the IRS requires a payer to withhold tax from certain payments to vendors, suppliers, contractors, etc. If a vendor, supplier, contractor, etc., either fails to provide you with their tax information, provides incorrect tax information, or the IRS has notified you, you would be responsible for withholding taxes from any payment you owe them. The current backup withholding rate is 24%. For example, if you are paying them $1,000, then you will hold out $240 and pay it to the US Treasury and show the taxes withheld on their 1099.

    What kind of payments are subject to backup withholding?

    Backup withholding can apply to most kinds of payments reported on Form 1099, including, but not limited to:

    • Interest payments;
    • Dividends;
    • Rents, profits, or other income;
    • Commissions, fees, or other payments for work performed as an independent contractor;
    • Payments by brokers and barter exchange transactions;
    • Payment Card and Third-Party Network Transactions; and
    • Royalty payments;

    Backup withholding also may apply to gambling winnings that aren’t subject to regular gambling withholding.

    When can you stop backup withholding?

    If the person or company for which you are doing backup provides you with their tax info or corrects the wrong information they initially provided, then you can stop backup withholding. Keep in mind, if you have to send a second notice to them, then they’ll need to provide you with a copy of their social security card that shows their correct name and SSN, or if it’s an entity then something from the IRS showing their legal name and EIN.

    We highly recommend that you have a potential vendor, supplier, or contractor complete a Form W-9 prior to engaging in business with them and use the IRS TIN matching program to validate tax information.
    Source: Internal Revenue Service (IRS)

  • What is a disregarded entity for tax purposes?

    What is a disregarded entity for tax purposes?

    A Limited Liability Company (LLC) is an entity that is created at the state level. Depending on how many members there are & which elections are made, the IRS will classify LLCs either as a corporation, partnership, or as part of the owner’s tax return (a “disregarded entity”). A domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner unless it files Form 8832 and elects to be treated as a corporation.

    If a single-member LLC does not elect to be treated as a corporation, the LLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return. In layman’s terms, a “disregarded entity” means the company is not separate from the individual that owns the LLC for federal tax purposes.

    If a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, the W9 should provide the owner’s SSN or EIN, not the LLC’s EIN

    Source: https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies

  • How can the vendor W-9 collection in QuickBooks® Online be Automated?

    How can the vendor W-9 collection in QuickBooks® Online be Automated?

    QuickBooks® Online (QBO) is one of the most popular and easiest accounting programs available. Many businesses and organizations rely heavily on QBO to run their operations efficiently and smoothly. There is a QuickBooks® Online integration available through getW9.tax, which helps users save time, money & headaches in getting Form W-9s from their vendors, suppliers, contractors, etc.

    How the getW9 integration with QuickBooks® Online (QBO) can save you time & headaches:

    The integration is a two-way sync, which means both systems talk to each other once the integration is set up. In the getW9 system, you can add as many of your companies as you need to, and each company can be independently integrated into its respective QBO account. Once the integration is completed, there are two ways a vendor’s W-9 can be requested, and their vendor profile in QBO, along with a PDF of the W9, can be updated.

    When New Vendors are added to QuickBooks® Online

    1. Anytime you add a new vendor to QBO along with their email address, getW9 will read the vendor’s name & email and send them an email request to fill out a Form W-9 online using the getW9 system. (Note: The process is entirely digital, and the person can fill out, sign & submit their W-9 all online without having to print or download anything).
    2. Once the W-9 has been submitted back, the vendor’s profile QBO will get updated with their address, tax ID, and a PDF of the W-9. The W-9 details & PDF will also be available in getW9.
    3. One thing to keep in mind when adding new vendors in QBO is if another existing vendor is using the same email address that you are going to use for your new vendor, then getW9 will not be able to pull the new vendor, due to the duplicate email address being used, however, you could remove the email from the other vendor using it, and add it to the new vendor’s profile, or you could create a request through getW9 as described below.
      All the W-9 requests created can be viewed & tracked in the getW9 account.

    Creating a Form W-9 Request in getW9

    1. Another way to add or update vendor profiles in QBO is by creating a Form W-9 request in getW9.
    2. Once you create a request in getW9, and the vendor fills out their W-9, then getW9 will create a new vendor profile in QBO and add all the vendor’s details, tax ID, and also attach a PDF of the W-9 to their vendor profile. Note, the details & PDF will also be stored in getW9.
    3. If the vendor already existed in QBO, and your QBO shows two vendors with the same name, then you could merge the two profiles by following the instructions provided by QuickBooks (click here to view the instructions on how to merge vendor profiles).

    We highly recommend that you have a potential vendor, supplier or independent contractor complete a Form W-9 prior to engaging in business with them.

  • 1099 vs W-9: What’s the Difference? | GetW9

    1099 vs W-9: What’s the Difference? | GetW9

    “If you’ve ever managed contractor payments, you may have wondered about the difference: 1099 vs W-9. Are they the same?”

    “Are 1099 and W-9 forms the same thing?”

    The answer: No — they are very different, and understanding the difference helps you stay compliant and avoid tax penalties.

    What Is IRS Form W-9?

    • The Form W-9 is used to obtain data such as name, address & tax identification number from your contractors, vendors, suppliers, etc.
    • The W-9 is not an annual form, it should be collected throughout the year from whomever you issue payments to.
    • The W-9 does not get filed with the IRS or any agency. You keep it in your records.
    • You do not need a W-9 from your employees, they would provide you with a W-4.

    What Is IRS Form 1099?

    • A 1099 is issued to various types of contractors, vendors, suppliers, landlords, etc. to whom you made payments during the calendar year.
    • There are many types of 1099 forms, such as 1099-NEC (nonemployee compensation), 1099-MISC, 1099-INT, etc.
    • A copy of the 1099 does get filed with the IRS and certain state agencies, and you also send your contractors, vendors, suppliers, landlords, etc., a copy of the 1099 after the year has ended.
    • Failure to issue a required 1099 could cause you to potentially loose a deduction/expense on your business tax return.

    Key Differences Between 1099 and W-9

    W-9 Form1099 Form
    Collected before paymentIssued after year-end
    Not filed with IRSFiled with IRS & sent to payee
    Gathers tax infoReports payments made
    Internal recordkeepingIRS compliance requirement

    The W-9 collects information — the 1099 reports payments.

    Final Takeaway

    Always collect W-9s before payment — and automate the process where possible.

    “When it comes to tax compliance, understanding 1099 vs W-9 is essential for any business working with contractors.”

    The W-9 collects contractor info; the 1099 reports what you paid them.

    “Learn more about IRS requirements here.”