Form W-9 reporting is a requisite for compliant submission of your business tax information, even though Form W-9 is not submitted to the IRS. As an accounting student, or professional, you must be aware that Form W-9 is quite important for your clients’ books and must be filled and recorded appropriately every time any of your clients signs on a new independent contractor for a job.
Need Help with Form W-9 Reporting?
Your clients will probably not understand why they are expected to ensure thorough Form W-9 reporting when they will never submit the document to the IRS. However, as their guide and assistant in these matters, you will want to tell them why this matter is so important. So, always bear in mind when you are meeting a new client or taking up a new portfolio that they will most probably need help understanding the significance of Form W-9.
You must also, in good conscience, advise your client against misusing this form and requesting it from their employees or contractors when it is not required. In case of employees, for whom your client pays social security and health insurance, requesting a Form W-9 will only make the employee suspicious of your client’s intent. They will most probably think your client is trying to save money by branding them independent contractors.
Understanding Tax Form W-9
If you see yourself working in corporate accounting services in the future, it is important for you to understand tax Form W-9 and why it is used. Officially called a Request for Taxpayer Identification Number and Certification form, Form W-9 is included in business contracts when an entity hires an independent contractor, which is what you would call construction contractors, service vendors, consultants, coaches, freelancers and such. The form requests contact information from the contractor, including their mailing address and contact numbers, as well as their tax identification number (TIN).
The form is then stored into the company records and, although it is an IRS document, it is not submitted to the agency. As a business, you require this information in compliance with IRS requirements that also make you liable to providing the agency with other information, namely Form 1099-MISC. You are supposed to report losses and profits along with revenue and expenses for an accurate estimate of your taxes, and any business required to provide this information is also expected to keep a Form W-9 for every independent contractor they have worked with.
As an accounting professional, it is your job to guide your clients with proper use of information they have about their business partners and agencies, including independent contractors. You must tell your clients, if they seem disinclined, that they cannot request this information from their employees or use the information to manipulate the system and not pay their due taxes fully. These things are necessary for correct Form W-9 reporting.
Our Products to Help You with Form W-9 Reporting
Reporting your Form W-9 properly is not difficult, since the form only requests some basic tax information from vendors, but the problem lies in the use of this information. As an educational resource known for our commitment to integrity, Lorman Educational Services has always ensured this instruction is included in all our Form W-9 reporting courses and webinars. As you can see below, we have a number of products available to you on this subject.
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