As a small business owner, you might have been approached by an independent contractor or freelancer who wants to work for your company; however, they ask you to fill out their Internal Revenue Service W-9 form in order for them to get paid. But, what is form W-9?

What is Form W-9?

Tax From w-9 top view with calculator and coins

Form W-9, Request for Taxpayer Identification Number and Certification, is a form that must be completed by people and businesses who receive money from you. It is used to:

  • Determine if they're eligible to work in the US
  • Determine them as a US person or Foreign National Identity what type of taxpayer they are (business, individual, etc.)

Anyone who receives income from you must provide you with their taxpayer identification number (TIN) and certify that it is correct. This includes:

You need to understand that filling out a W9 form is required by the IRS for people who receive $600 or more in compensation from your company in a year and are not employees (note: an LLC member counts as an employee).

Filling Out a W-9 Form

Forms for tax filing

When filling out the first sections of the Form W-9, you must use your legal name as it appears in the IRS records and your papers.

Line 2: Name of your company or disregarded entity name

Enter the full record name as mentioned in the Internal Revenue Service records.

Line 3: LLC tax classifications

Let's go through each LLC federal tax classification and how to fill out Form W-9 for each one.

C-Corporation tax status (C)

A C-Corp is a limited liability company that elects to be taxed as a corporation by the IRS. This is the option of being taxed as a C corporation. Whether there is only one member or many, this status can be assigned to the LLC.

  • If your LLC is taxed as a C corporation, please check the box on line 3 of IRS form 8832.
  • On the left side of the screen, click on “Completed Forms” and then “Form 941.” To the right of the LLC box, type “C.”
  • On line 1 of the form, include the legal name of the LLC as it appears on IRS documentation.
  • TIN- Enter the EIN, employer’s identification number

S corporation tax status (S)

magnifying glass on top of tax forms

An LLC that wants to be classed as an S corporation by the IRS must fill out Form 2553.

This is a paperwork choice to be taxed as an S corporation. Whether there's a single member or many, this status may be granted.

  • If your LLC is taxed as a C corporation, check the box on line 3 of Form 941 and write in "S" to the right of the LLC box.
  • Name- Enter the legal name of the LLC, as it appears on IRS documentation on line 1 of the form.
  • TIN- Enter the EIN, employer’s identification number

Partnership tax status (P)

All LLCs with more than one member that has not chosen to be treated as an S or C corporation for tax purposes will be treated as a partnership by default.

  • LLCs with two or more members should check the box on line 3 of the Form W-9 and enter "P" to the right of the box if they are operating as a pass-through entity.
  • Name- Enter the legal name of the LLC, as it appears on IRS documentation on line 1 of the form.
  • TIN- Enter the EIN, employer’s identification number

Single-member LLC (disregarded entity)

The IRS does not consider a single-member LLC to be a separate entity from its owner. In this situation, single members must fill out their Form W-9.

  • Unless the single-member LLC has chosen to be classified as a C or S corporation, it should enter its owner's tax classification on line 3.
  • Name- Enter the legal name of the LLC’s owner, as it appears on official documentation on line 1 of the form.
  • TIN- Enter the owner’s SSN, social security number

Other Things To Know About A Disregarded Entity

Businessman watching co worker sign and check a file

Any foreign business will be considered a disregarded entity and may have any of these LLC classifications:

  • Foreign General Partnership (GP)
  • Foreign Limited Liability Partnership (LLP)
  • Foreign Limited Liability Company (LLC)

If you are a Foreign General Partnership (GP) or Foreign Limited Liability Partnership (LLP), check the fourth box on the W-9. Fill out lines A – D as instructed.

Finally, if you are a Foreign Limited Liability Company (LLC), check the fourth box on the W-9. Fill out lines A – D as instructed.

Line 4: Exemptions

Individuals or organizations that are not subject to backup withholding or FATCA reporting can indicate it on line 4. They may do so by entering any of the four correct codes on this line.

Line 5 & 6: Address

To register, you must first type in your complete address. Then, go through the three statements in Part 2 and sign them to verify that they are correct.

Part II: Certification

By electronically signing your Form W-9, you verify that the data is accurate.

FAQs

What Is Backup Withholding?

Backup withholding is a type of withholding tax. The IRS requires it in specific situations, such as when you do not provide your correct name and TIN to the payer (seller) or when the payer has no record of receiving your TIN and cannot reach you at your home or business address.

Is a W-9 Needed for an LLC?

Yes. As a way of streamlining the process for businesses, if you are an LLC with no employees and don't need to file a tax return, then check the box on line 3.

However, if you have employees or want to report taxes, check the LLC box on line 1 and fill out Form W-9 as normal.

Filling Out W9 for LLC: Conclusion

To recap, filling out Form W-9 as an LLC is not too complicated. As an LLC, you must submit a W-9 form if someone (a buyer) requests it, and there may be penalties for failing to do so. Therefore, follow the steps and fill them in according to your business structure.

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