For a number of reasons—holidays, closing periods, and looming tax deadlines—year end can be a stressful time of year. Establishing good tax preparation habits now can help alleviate the tax stressors when the new year approaches.
For example, are your vendor files complete? Form W-9, Request for Taxpayer Identification Number and Certification, can become your new “best friend,” if used consistently. The information reported on Form W-9—business name, mailing address, and Federal Employer Identification Number (FEIN) or Social Security Number—is required in filing the Forms 1099 that your business provides to your vendors each year.
Often, this information is not requested from vendors until businesses begin the process of preparing their required Forms 1099 at year end. At that point, some businesses may begin the daunting task of calling each of their vendors to request the needed information, hoping that everything is complete prior to the January 31 deadline.
It’s not too late to resolve to put in place a new best practice—be proactive throughout the year by requesting a completed Form W-9 from any unincorporated vendor to whom you are paying more than $600 (the Form 1099 filing threshold), prior to paying them. If you can collect the necessary information via the Form W-9 throughout the year, the month of January should yield fewer paperwork headaches. You can print a copy of Form W-9 directly from the IRS website.
PYA is available to help you establish procedures and best practices in your accounting function. If you have questions about the above information, contact the expert listed below at PYA, (800) 270-9629.
WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
