When do I need to request a Form W-9 from a vendor?
If you are hiring an independent contractor to provide or complete a service, it is highly recommended that you request a copy of a signed Form W-9 prior to that contractor beginning the project. (It is also advisable that you obtain a copy of the contractor’s Workers' Compensation/General Liability insurance policy.)
Although incorporated vendors do not require a 1099-MISC to be issued at year-end (C-Corps and S-Corps), it is still within your right to request a W-9 from these types of vendors. You may also choose to issue them a 1099-MISC.
Two common reasons why requesting a W-9 from ALL vendors is a smart decision:
1. A signed W-9 confirms, under perjury laws, that the signer is providing accurate information regarding their entity type, federal tax classification, and Taxpayer ID Number (TIN). A vendor can say that they are incorporated, and that they do not need to provide a W-9 or receive a 1099-MISC at year-end, but that is not always accurate.
2. Many people confuse vendors with an “LLC” designation as incorporated. The “LLC” tag refers only to a company’s ability to separate personal liability from liability arising as a result of business operations. Any of the following entity types may be designated as an LLC, in addition to their federal tax classification:
- C-Corporation (incorporated)
- S-Corporation (incorporated)