W9's for everyone!

It's that time of year, end of the year, when you notice the things that you haven't kept up with, or didn't know you needed to be doing all year-long...so it goes.

Things that haven't been addressed completely, procedures not quite in place, are suddenly visible, requiring attention, decisions and resolution. That's just something that happens in December, I think. The year's coming to an end, and we'd like things organized and put to bed, so we can start fresh—ready for the new year.

The question of who should fill out a W9 is one of those things lately—especially with clients who have storefront businesses...cash registers. 

I think having a cash business makes it harder to maintain formality in financial matters. Cash just feels more casual than a check. So, when you pay the guy who did some work for you around the store, you give him a few bucks out of the register, not noticing that he didn't give you an invoice, much less his W9 form. 

I get that.

Also, true for start-ups, new businesses, who might be handwriting checks, rather than having their accounting department issue them, who may be doing business with associates who are friends first, providing a service second...the routine formalities won't feel like they apply.

But they do.

You're a business. You have to account for everything your business does financially; all expenditures go on your books—even if they're in cash, or small or to individuals who aren't part of an established a company (there really is no such thing as off the books), and at tax time, they will be reported as expenses by you, and as income by the providers.

So, the W9 form—who should fill it out?

How about everyone?

To keep it simple, don't distinguish between paying an individual for their services, freelancer, sole proprietor, LLC or a corporation. If you're paying a vendor, get a W9 from them.

Scratch that -- if you're going to pay a vendor: get the W9 form first! That way, you'll have what you need on file when it comes time to issue 1099-MISC forms. Regardless of whether you'll be issuing one to this particular vendor, friend or company...just have everyone fill out a W9 form. 

What are they?—W9 forms

The W9 is short form that you can download here. They identify individuals and companies—their names, addresses and either social security # or business Tax ID #. That's it.

And, the 1099-MISC?

They're like the W2 you issue to your employees — they declare the amount of income a vendor received from you in a year. No taxes will have been taken out, as they would in the case of your employees. That'll be up to the vendor to pay any income tax owed when s/he files her personal or company tax return.

So, for employees, when you hire them, they fill out a W4 to give you the info needed for their W2, and for other people your business pays, they fill out a W9.

Here are a couple of links to what the IRS has to say about W9s and 1099-MISC income

WHAT DO YOU GET WHEN YOU CONSISTENTLY MAINTAIN YOUR BOOKS?

READINESS —

[1] With accurate, detailed and up-to-date company information, you'll be equipped to make decisions, about:

  • how to grow your business
  • how to minimize expenses
  • what to delegate
  • what to stop doing
  • how much risk does a new idea really pose for you

Because you'll be able to see the financial impact of everything you're doing, you'll be in a position of strength. You'll see what you actually are accomplishing, what it's costing you and what money it's bringing in.

Without the records to inform you point of view, you may be over- or under-estimating the value (or cost) of doing business.

Reports generated off correctly-entered books may reveal some disconcerting facts about how much you're spending, or how little you're earning, but after the initial sting, you'll be in a position of strength from which to make better decisions about how to build your business. 

[2] You'll be easily able to reply to third-party requests for information.

This may not come up often, but when it does, when establishing a partnership with another vendor or client, being able to reply quickly and definitively to their inquiries represents you as competent, efficient and easy to work with. I'd choose you!

[3] And, you'll have everything in order for an audit.

Audits usually look at previous years, so while there may be nothing prompting the likelihood of an audit on your horizon today, things may change, so if you're managing your record-keeping now, you'll be all set then.

PEACE OF MIND —

Maintenance activities, like doing the dishes, laundry, exercising three times a week—or bookkeeping, may not be appealing, but not keeping up with them has an impact.

The to-dos we didn't get to clutter our minds. They leave a hum going in the background, reminding us to get to these things at some point. They cause you to waste mental energy (attention you could be turning elsewhere) and they debilitate your capacity in the areas you are attending to.

Maintaining a routine bookeeping practice leaves you 

clear-headed and free to pursue more stimulating and income-producing activities. 

it may not be more time or energy that you need

Those things that need to get done in order to move forward with your books...you have no idea when or how you'll get to them. I get that.

Your day-to-day is solid through, and you just haven't been able to make the necessary room, the time, to do one more thing. You'd like to. You know it's important. You mean to and want to, but so far there just has not been any time, or energy, that you can spare for this.

I get that.

Maybe that's not what's needed here. 

Sometimes, it just takes company — having someone else there, contributing their energy and interest in seeing you get this thing done, hanging out with you through the initial procrastination—so that you can do what you need to: dig around in those files, get the printer to work after that other thing — sometimes, it just takes the company of someone else being in it with you while you do whatever it takes to get started and settled into doing that thing you haven't been able to do on your own.

It's true for everyone at one time or another.

No one can do everything on their own.

That doesn't just apply to friend-support, family, an actual plumber vs. DIY. Sometimes to do things for your business that you're capable of doing — but just are not doing — what you need is someone else in the room to absorb the inexplicable stuckness surrounding you.

Because it doesn't matter whether there's anything hard or expertise-required about the task at hand, what you need to move forward with your books is a little company while you clear a path and get started.