Christopher Ozdarski, CPA

Do you hire independent contractors for your business? If so, hopefully you’ve already reviewed the employee vs. independent contractor rules with your CPA. Having concluded that these individuals can in fact be paid as contractors, the next step is to collect the necessary taxpayer information so that you can issue them a 1099 at the end of the year.

To collect this information, use IRS form W-9. Here’s a link to the form at the IRS web site:  Request for Taxpayer Identification Number and Certification.

Be sure to collect this information before you pay your contractor.  They may not be as cooperative if you wait until you are trying to prepare a 1099 for them at the end of the year.  Also, having them complete this form helps to put them on notice that they are being treated as an independent contractor and that they should plan accordingly regarding their tax filing requirements and ultimate tax burden.

In addition to obtaining the W-9 you should consider some form of written contract with your independent contractor that outlines the relationship to reduce the risk that they would be considered an employee.

Having the W-9, with or without a contract, doesn’t necessarily resolve the employee vs. contractor question.  Feel free to contact me if you have any questions about the differences between employees and independent contractors or your responsibility for issuing 1099 forms at the end of each year.

Christopher