Why would a lender request a W9?

[CANative]

why do I care about 1099's????? As a business owner I am responsible for reporting my own taxes. I don't need 1099's to do so. How can a customer that orders a product from my company decide that they are only going to pay a portion of the price for it after a set price has been agreed upon? how can they possibly withold an agreed upon price once the product has been sent?

The W9 is to verify your TIN or SSN. You probably need to send it if they ask for it. You don't send one for each job or fill out a form with how much you billed them. It's just a simple form to verify your numbers so they can prepare a 1099. Takes about 30 seconds. I have an electronic version that only needs the name of that company filled in and gets sent as a pdf.

 

[Terrel L. Shields]

why do I care about 1099's????? As a business owner I am responsible for reporting my own taxes. I don't need 1099's to do so

Then don't do it and see how quick the IRS lands on your butt....

 

[BRCJR]

The W9 is to verify your TIN or SSN. You probably need to send it if they ask for it. You don't send one for each job or fill out a form with how much you billed them. It's just a simple form to verify your numbers so they can prepare a 1099. Takes about 30 seconds. I have an electronic version that only needs the name of that company filled in and gets sent as a pdf.

What he said.........

 

[JTRock]

I appreciate all the responses but I am still trying to find a direct answer. This seem like business 101 to me. Customer orders a product from Company A for the set price. Company A gives the product to the customer and the fee is paid. Company A does not work for the customer as an employee or is set up under the company as an independent contractor. Company A is responsible for reporting their own financials for tax purposes. So the question still remains, why is the W9 being requested?

 

[BRCJR]

I appreciate all the responses but I am still trying to find a direct answer. This seem like business 101 to me. Customer orders a product from Company A for the set price. Company A gives the product to the customer and the fee is paid. Company A does not work for the customer as an employee or is set up under the company as an independent contractor. Company A is responsible for reporting their own financials for tax purposes. So the question still remains, why is the W9 being requested?

Because the IRS says so....The IRS approves of only two employment relationships. One is confirmed with a W4 and the other, you guessed it, the W9. Business 101.

The lender, in this case, needs something to defend their choice of payment to you, the contractor.

 

[Terrel L. Shields]

BRC said it right. I have sent out 1099s for 20 years. I have got 1099s far longer. We get one for our mineral rights, you are supposed to now even collect one from your renters... few do it. It is misc. income - Purchasing a product is a different animal from paying for a service.

 

[Tim Hicks (Texas)]

How long have you been in business???? Your clients are required by the IRS to file 1099's for any vendor they pay more than $600 in a year. Some will file any amount they pay. They usually ask all vendors to supply a W-9 because they don't want to have to ask for it at the last minute. Don't you get several 1099's on or about 01/31 every year? The IRS can cross check your claimed income versus 1099's filed.

 

[Michigan CG]

......So the question still remains, why is the W9 being requested?

You have been told numerous times, it is FEDERAL LAW that you do this. As a small business do you REALLY want the IRS looking at you and your company? Better get ready for an audit (they ain't pretty, been there done that) from the IRS.

It takes less than a minute.

 

[CANative]

I don't think there is a law requiring him to provide a w9. But if he doesn't they can institute backup withhold of 28% or so.

Isn't that how it works?

 

[BRCJR]

Answer to your question:


So the lender, or whomever, may prove you were not an employee, period.