Automate the 1099 process using Form W-9 with TaxBandits
Although January may feel impossibly far away right now, it is never too soon to begin thinking about your businesses’ year-end filing. One of the most stressful aspects of maintaining your IRS compliance is determining the difference between your business’ employees and vendors and then filing accordingly, and accurately.
Employees will need Form W-2 at the end of the tax year, while vendors that you work with, but are not on your payroll, will need 1099 Forms instead.
To avoid mistakes in your year-end tax forms, it is best practice to request a Form W-9 from every vendor that you do business with. This will ensure that you have the information available to file their Form 1099 at the end of the tax year.
What is the Purpose of Form W-9?
Form W-9 is the Request for Taxpayer Identification and Certification. This is an often overlooked, but very important IRS form. While this is not a form that businesses or individuals are required to file with the IRS, it is a form that every business should use for their recordkeeping.
To file Forms 1099 for your vendors, you will need certain information from them. Most importantly, you will need their taxpayer identification number, also referred to as a TIN. If the vendor is an individual, this will be their social security number (SSN), if the vendor is a business, this will most likely be their employee identification number (EIN). On Form W-9, your vendor must enter their TIN and sign to certify that the number is accurate.
Without a valid TIN number, the Form 1099 you file for this individual will not be accepted by the IRS and you may need to subject the vendor to backup withholding. This is where you are required to withhold 24% of the vendors’ payments on behalf of the IRS. Form W-9 essentially solves this problem for businesses.
How to Request Form W-9?
The main drawback of the W-9 Form is the process for requesting it. This is often a paper process, involving mailing or faxing the form back and forth between you and your vendor, with the ongoing pandemic, this is just another barrier to completing this process easily.
To take the headache out of this process, TaxBandits created an online option for requesting Form W-9. Business owners can easily send a Form W-9 request to their vendor through us by providing their email address. Your vendor will then receive an email to begin filing Form W-9 with TaxBandits. Once your vendor creates an account with us and completes their Form W-9, they are able to easily provide an e-signature before submission. Once the vendor submits their Form W-9, you will be notified. The form is now available for you and your vendor whenever needed through TaxBandits.
Automating your Form 1099 Filings
Now that you have collected your Form W-9 information through TaxBandits, this information will be stored securely in your account. When it comes time to complete Forms 1099, you can easily generate the forms automatically by pulling in your vendor’s W-9 data.
Additional Benefits of Using TaxBandits
Gathering your vendors’ TINs is one part of the equation, ensuring that they are valid is the next step to ensuring you meet your IRS tax filing requirements. TaxBandits offers a TIN Matching feature; we validate your vendors’ TINs against the IRS database to ensure accuracy.
In addition to filing your Form 1099s, we support Form W-2, the 94x Series, the Form 990 Series, and ACA Forms 1095, and many more!
For more information about the W-9 process, click here. You can get started today by creating a free account.
