What Is a W-9 and Why Are My Clients Asking for One?
As a coach you are charging your clients for sessions with you, so why are they sending you a W-9 form to fill out and what is it? I’m going to clarify both of these questions in this post today!
What is a W-9?
A W-9 (short for Form W-9) is a form that asks for:
Your name if your business is a sole proprietor or LLC or business name if your business is a corporation or S Corp
Business name if you put your name on line 1
Entity type
Exemptions
Address
Requester’s name and address (I always fill this in before sending it to the other person to fill out)
Social security number or EIN number (if you don’t have an EIN number you should definitely read this post for why and how to get an EIN for free)
It looks a little something like this. You can get the real thing here.
Ok, now I understand what’s on the form, but…
Why am I getting a W-9 from my client?
In business when you pay another business more than $600, you may need to file a 1099-NEC or 1099-MISC with the IRS (our next blog posts will cover these in detail), specifically if you paid them cash, check, ACH (bank to bank transfer), or an ACH app like Venmo (if you’re using the personal account).
So you’re getting a W-9 because your client paid you more than $600 with either cash, check, or ACH and they expect to have to file a 1099-NEC for your coaching services.
Wait, so do I need to send W-9s out too?
Maybe! Did you pay more than $600 in cash, check, or ACH for services or rent? Then yes you do.
Here’s an un-exhaustive list of contractors and professionals you need to consider:
rent paid to a landlord (if you pay a real estate agent or property manager you don’t need to send one)
lawyer
coach
bookkeeper
tax preparer
virtual assistant
social media manager
ads manager
graphic designer
website designer
online business manager
and any other contractors
I sent a W-9, but they won’t fill it out. What do I do?
One of three things might be happening.
1) They are a corporation or S Corp and you won’t need to file a 1099-NEC or 1099-MISC for them (this does not apply to lawyers and the 1099-MISC - they get one regardless of entity type).
If this is the case, ask them to fill it out anyway so you’ll have it for your records if you’re ever audited. But also let them know you won’t be filing a 1099-NEC or 1099-MISC if they are a corporation or S Corp. That should ease them into completing the form for you.
2) You didn’t pay them with cash, check, or ACH and they don’t want you to file a 1099-NEC or 1099-MISC for income that is already being reported by their payment processor.
In this case, it’s fine. You didn’t pay them with those payment types so you can let it go. The payment processor they use will issue them a 1099-K if they make more than $20,000. You’re off the hook!
3) They don’t want to report their income…AKA they want their money off the books so they don’t have to pay taxes on it.
If this is the case, you need to be clear that you will still be filing a 1099 without their cooperation.
When you file you will have to do a paper 1099 because online filing will not accept an incomplete form. In the ‘Recipient’s TIN’ box you will need to write ‘Refused’.
If you need help filing 1099s, we can help file these for you for just $25 per form!
If you found this article helpful, you’ll love our FREE Bookkeeping Checklist!
The checklist has all the weekly, monthly, quarterly, and annual accounting tasks you need to do! You’ll find sending out W-9s under the annual tasks.
