Our office highly recommends business owners require form W-9 from all vendors they expect to pay more than $600 and proof of insurance before the vendor is paid for services. Making this a normal business practice will save you many headaches throughout the year. Collecting form W-9 provides the business owner with the vendors address, tax ID number and tax classification. This information is needed for annual reviews by insurance companies, workers compensation and to prepare 1099s at the end of the year.
Federal law requires Form 1099-MISC be issued to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. Form 1099-MISC Instructions. You do not need to issue 1099s for payments made for personal purposes. You are required to issue 1099-MISC reports only for payments made in the course of doing business or if you own rental property.
Forms W-9 and 1099-MISC are the business owners responsibility. Forms 1099-MISC must be postmarked by January 31, 2020. The IRS has special penalties for not timely issuing these forms.
Download Form W-9 here: