When must i require a W9 form from workers

Discussion in 'Economics' started by birdman, Jul 28, 2007.

  1. birdman


    What's the rules on W9 forms. I know i fill them out before certain companies can pay me, but i never have required them from my employees.

    I outsource most work, but have one guy i pay a thousand per week and always write consulting fee on the check.

    I rarely contact him, he's never been in my office. I consider his work outsourced too.

    Don't i have to have a certian number of employees or something before needing W9.

    I'm considering hiring a few folks.

    What do i need to know?

    Some folks will be part time, some full time, some paid hourly and some paid for performance.

    What do i need to know tax wise?
    When will i have to withhold?
    How can i avoid the hassle?

  2. ronblack


    Birdman, do yourself a favor and consult a good CPA.

  3. correct. You are likely to get a lot of bad advice mixed in with any good.
  4. birdman


    thanks guys:)
  5. You don't need to get a w9 from anyone that does work for you. If they are contract workers just 1099 them. You only need to have a w9 if you didn't 1099 them.
  6. You have to withhold and pay fica and medicare on all people who are full time employees or part-time employees who work on a schedule. If you have what you call "an out sourced worker" but he works for you full time and you don't withhold you are breaking the law. Just because you never see him does not matter. If he goes to a job every day for you he is an EMPLOYEE.

    If you want to avoid the hassle of having employees then you can use a temp service for temporary help. You will pay a higher rate per hour but you won't have to match fica and have tedious record keeping.
  7. If the employee will be receiving a 1099 from you at the end of the year, then you need a W9 from them. If they are receiving a W2 from you, then they need to fill out a W4 for you. The W9 does not allow for filling out dependents claimed because you are not withholding anything from them in the first place. A W2 employee may want to claim 3 dependents, so they fill out the W4 so you know how much to withhold on their checks.

    As for the consultant, as long as he has his own company that he files taxes for, you are in the clear. If he files as strictly an individual, it would probably be best to 1099 him. If he isn't claiming the money, you could get in trouble as well.
  8. I didn't address this, but they are having you fill it out for the same reason you probably want to have your consultant fill it out. They want to make sure that you report the money they pay you for your services. If you aren't reporting the money and it is fairly substantial, it does not reflet well on them. They are basically viewed as paying you under the table.
  9. birdman


    my marketing consultant is considered a joint venture partner ... i put up the cash and manage the tech portion and most of the business end ... he arranges marketing aggreements on pay for performance

    i'm just now trying to determine how to classify him ... partner? consultant? marketing?

    I'll get some input from him, got to keep uncle sam happy at the end of the year.
  10. I beg to differ. The whole purpose of a w9 is to make sure someone is reporting income. If you 1099 them YOU ARE reporting his income to the IRS. A w9 is to protect a company who is not going to 1099 someone for their services because they are exempt.
    #10     Aug 1, 2007