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Getting a Signed W-9 is important!

March 15, 2016


Do you hire contractors when needing help for your business? If so, getting a signed W-9 from them is very important!

If the contractor refuses to fill out the W-9 form, you are required by Federal Regulations to withhold 31% from the payment due to them and submit it to IRS for Federal Taxes. The penalty for continuing paying a contractor without filing their Tax ID number to the IRS is up to $100,000!

Not sure how to treat a worker - as an employee or contractor? Follow these Common Law Rules:

  • Behavioral - Does the company control or have the right to control what the worker does and how the worker does his or her job?

  • Financial -Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

  • Type of Relationship -Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If you answer Yes to all these questions, than most likely the worker in an employee and needs to be treated as an employee, not an Independent Contractor

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