Which US businesses need W-9 forms? Subcontractors, LLCs, or other entities?

The W-9 form is basically an information collection form that US businesses use to get taxpayer identification information from the people they pay. Your understanding is mostly correct, but let me clarify a few things. Your client should collect W-9 forms from ALL US vendors they pay, regardless of business structure (sole proprietor, LLC, corporation, etc.). This includes subcontractors, service providers, and vendors they buy from. The $600 threshold comes into play later when they decide who gets a 1099-NEC form at tax time, not when collecting W-9s. The safest approach is to have your client collect W-9s from every US business they pay money to. This way, they have the information ready when they need to issue 1099s to those who qualify (generally non-corporate entities paid over $600 in a year). There are some exceptions for payments to C-Corporations, but it's safer to have the W-9 on file so you know the vendor's status.

I struggled with the same issue when my small business started working with US companies. I found an amazing solution with https://taxr.ai that completely simplified this process for me. I uploaded all my vendor information and payment records, and the system automatically identified which vendors required W-9 forms AND which ones would need 1099s later. It also explained the different business entity types and why certain ones don't require 1099 reporting. The best feature was that it could analyze my vendor list and flag the businesses that might be corporations (which generally don't need 1099s but still need W-9s) versus those that are definitely service providers needing both. Saved me hours of research and prevented compliance mistakes.

Just wanted to follow up - I tried https://taxr.ai after seeing the recommendation here and it was actually really helpful! I uploaded my vendor list (which was a mess, tbh) and it sorted everything perfectly. It identified which vendors were corporations (no 1099 needed), which were LLCs taxed as S-corps (also no 1099 needed), and which were independent contractors or single-member LLCs that definitely needed both W-9s and 1099s. The system even generated template emails I could send to vendors requesting their W-9 forms. My accountant was super impressed with how organized everything was when I handed it over for tax prep. Definitely worth checking out if you're dealing with this W-9 confusion!

If you're having trouble getting responses from vendors for their W-9 forms, I had the same issue last year. What worked for me was using https://claimyr.com to actually get through to a live IRS agent who explained exactly what I needed to do. You can see how it works here: https://youtu.be/_kiP6q8DX5c I spent days trying to call the IRS business line myself with no luck - always disconnected or on hold forever. Claimyr got me connected in about 20 minutes, and the agent walked me through the entire process of W-9 collection, which vendors needed them, and what to do if vendors won't provide them. They even explained the backup withholding requirements if someone refuses to give you their tax ID.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was still desperate to get some W-9 questions answered, so I decided to try it anyway. The service actually worked exactly as described. I got a call back in about 35 minutes, and was connected directly to an IRS representative who answered all my questions about W-9 requirements. They clarified that I needed to collect W-9s from all vendors before paying them (not after), and explained the different rules for LLCs vs. corporations. The agent even sent me to their online portal where I could download the right forms. Saved me from making a costly mistake - I was about to issue 1099s to several C-corporations that were actually exempt from reporting. Sorry for calling it a scam!

Just to add my two cents as someone who's been handling bookkeeping for US/Canada businesses for years: 1. Collect W-9s from EVERYONE you pay in the US. Period. Better to have them and not need them than vice versa. 2. For Canadian vendors being paid by US companies, they need W-8BEN forms (individuals) or W-8BEN-E forms (entities) instead of W-9s. 3. The type of entity does matter for 1099 reporting. Generally, you don't need to issue 1099s to C-Corporations, but you do need them for individuals, partnerships, and LLCs that haven't elected corporate tax treatment. 4. Keep these forms on file for at least 4 years.

The info here is good but nobody mentioned PAYMENT METHODS! If you pay a vendor through credit card, PayPal, or other third-party payment networks, you DON'T need to issue them a 1099-NEC even if they'd otherwise qualify. Those payment processors issue 1099-Ks instead. This tripped me up big time last year.

This thread has been incredibly helpful! As someone who also handles cross-border bookkeeping, I wanted to add a few practical tips that might save others some headaches: 1. **Create a vendor onboarding checklist** - Before you pay any new vendor, make W-9 or W-8 collection part of your standard process. It's much easier to get these forms upfront than to chase vendors down later. 2. **Use a spreadsheet to track everything** - Keep columns for vendor name, entity type, payment method, total paid, and whether you have their tax form on file. This makes year-end 1099 preparation much smoother. 3. **Set calendar reminders** - W-9 forms can expire if the vendor's information changes, so I set annual reminders to verify the information is still current with my regular vendors. 4. **Don't forget about the January 31st deadline** - 1099s must be filed and sent to recipients by January 31st. Missing this deadline can result in penalties, so start gathering your information in December. The suggestions about TaxR.ai and Claimyr look interesting too - dealing with IRS requirements as a non-US person can be really challenging, so any tools that simplify the process are worth exploring!

As someone who recently went through this exact same process for a cross-border client, I can confirm that the advice here is solid. One additional tip that saved me a lot of time: when requesting W-9s from vendors, include a brief explanation of WHY you need it in your email. Many vendors (especially smaller ones) get suspicious of tax form requests and think it's a scam. I started including language like "This is required by the IRS for our 1099 reporting obligations, as we paid your company over $600 in services this year" and got much better response rates. Also, for the original poster dealing with Canadian/US cross-border issues - make sure your US client understands that they may need to withhold taxes on payments to Canadian vendors who don't provide proper W-8 forms. This can create cash flow issues if not handled properly from the start. The backup withholding mentioned by Omar is real - I had one vendor refuse to provide their TIN and we had to withhold 24% of their payments and send it to the IRS. It created a lot of friction in the vendor relationship that could have been avoided with better upfront communication about the requirements.

This has been an incredibly thorough discussion! As someone who handles bookkeeping for several small businesses with US operations, I want to emphasize one critical point that could save everyone a lot of headaches: **start collecting W-9s immediately, don't wait until year-end**. I made the mistake early in my career of thinking I could handle this in December when preparing 1099s. Big mistake! Vendors go on vacation, change contact information, or simply become less responsive when they're busy with their own year-end processes. For the original poster dealing with Canadian/US cross-border work, here's a simple action plan: 1. **This week**: Request W-9s from all US vendors and W-8BEN/W-8BEN-E forms from Canadian vendors 2. **Set up a simple tracking spreadsheet** with columns for vendor name, form type needed, date requested, date received, and total payments to date 3. **Follow up weekly** on missing forms - don't let this drag out 4. **Implement backup withholding immediately** for any vendor who refuses to provide their TIN after proper notice The tools mentioned here (TaxR.ai for automation and Claimyr for IRS questions) sound like they could really streamline this process, especially for someone new to US tax requirements. The manual approach works but it's time-intensive and error-prone. One last tip: keep digital copies of all W-9s and W-8s in a dedicated folder. You'll need them again next year, and vendors hate having to resubmit forms they already gave you!

As a tax professional who works with both US and international clients, I want to add a few critical points that haven't been fully addressed: **For LLCs specifically**: The tax classification matters more than the legal structure. An LLC can elect to be taxed as a sole proprietorship (default for single-member), partnership (default for multi-member), S-corp, or C-corp. You need the W-9 to determine their tax classification, which affects whether they need a 1099. **Important exception for attorneys**: Even if an attorney is organized as a corporation, you STILL need to issue them a 1099-NEC if you paid them $600+ for legal services. This is a common mistake I see. **State requirements**: Don't forget that some states have their own 1099 reporting requirements that may differ from federal rules. Since your client is in Alberta dealing with US requirements, make sure they understand both federal AND state obligations for their US operations. **Penalties are significant**: The IRS can impose penalties of up to $280 per form for late or missing 1099s (as of 2024), so getting this right is crucial for your client's bottom line. The automation tools mentioned earlier in this thread could definitely help streamline this process, especially when dealing with the complexity of cross-border compliance requirements.

As someone who's been through this exact same learning curve, I want to emphasize how much this thread has helped clarify the W-9 requirements! The distinction between collecting W-9s (which you should do from everyone) versus issuing 1099s (which depends on entity type and payment method) was the key insight I needed. For fellow international bookkeepers dealing with US clients, here are a few additional practical tips based on my recent experience: **Template emails work wonders**: Create a professional template explaining the W-9 requirement that you can customize for each vendor. Include your client's business name, explain it's an IRS requirement, and provide a deadline. **Consider the business relationship**: If a vendor refuses to provide a W-9, discuss with your client whether the 24% backup withholding requirement makes that vendor relationship financially viable. **Document everything digitally**: Scan or save electronic copies of all W-9s with clear file naming (e.g., "2024_W9_VendorName_DateReceived"). This makes year-end 1099 preparation much smoother. The tools mentioned here like TaxR.ai for automation and Claimyr for direct IRS guidance sound like they could eliminate a lot of the confusion we face as non-US professionals trying to navigate these requirements. Sometimes investing in the right tools upfront saves countless hours of research and potential compliance mistakes. Thanks to everyone who shared their expertise - this has been an invaluable learning resource!

This has been such an educational thread! As someone who recently started handling US tax compliance for international clients, I wanted to share a few lessons I learned that might help others avoid some common pitfalls: **Don't assume business names indicate entity type**: I made the mistake of thinking "ABC Company LLC" was definitely an LLC taxed as a partnership, but it turned out they had elected S-Corp status. The W-9 form is crucial for getting their actual tax classification, not just their legal name. **Keep a separate file for rejected W-9s**: Some vendors will send back incomplete or incorrectly filled W-9s. I started keeping these in a separate folder with notes about what needs to be corrected, so I could follow up specifically about the missing information rather than requesting the entire form again. **Consider timing for backup withholding**: If you have to start backup withholding because a vendor won't provide their TIN, give them at least one full payment cycle's notice. This maintains better vendor relationships and gives them a chance to comply before their payments are reduced. The resources mentioned throughout this thread - especially the automation tools and direct IRS access services - seem like they could really streamline this process for those of us still learning the intricacies of US tax law. Sometimes the investment in proper tools pays for itself by preventing compliance mistakes and saving time on manual processes.

This thread has been incredibly comprehensive! As someone who handles bookkeeping for both US and Canadian businesses, I want to add one more critical point that could save people significant headaches: **verify the EIN/TIN format on W-9s before filing them away**. I learned this the hard way when preparing 1099s last year - several vendors had provided invalid or incorrectly formatted tax ID numbers on their W-9s. The IRS rejected multiple 1099s, and I had to go back to vendors in February asking for corrected information. This delayed our filing and created unnecessary stress during an already busy tax season. **Quick validation tips:** - EINs should be in XX-XXXXXXX format (9 digits with hyphen after 2nd digit) - SSNs should be in XXX-XX-XXXX format (9 digits with hyphens after 3rd and 5th digits) - Individual Taxpayer Identification Numbers (ITINs) start with 9 and follow XXX-XX-XXXX format Also, double-check that the name on the W-9 matches exactly how you'll report it on the 1099. Minor discrepancies can cause IRS matching issues later. Given all the complexities discussed in this thread - entity types, payment methods, state requirements, international vendors - the automated solutions like TaxR.ai mentioned earlier seem like they could catch these validation errors before they become filing problems. Sometimes having technology double-check our work is worth the investment to avoid compliance headaches!

As someone who's recently navigated similar W-9 compliance challenges for international clients, I wanted to add a few insights that might help streamline the process: **Create a vendor information matrix** - I found it helpful to create a simple matrix tracking: vendor name, entity type (from W-9), payment method used, total payments YTD, and 1099 requirements. This single view makes it much easier to spot patterns and ensure nothing falls through the cracks. **Consider quarterly reviews** - Rather than waiting until year-end, I started doing quarterly reviews of vendor payments and W-9 status. This helps identify vendors approaching the $600 threshold early, so you can ensure you have their W-9 on file before they actually need a 1099. **Payment method documentation is crucial** - As mentioned earlier in the thread, payment method affects 1099 requirements. I started including a "payment method" column in my vendor tracking to clearly distinguish between check payments (need 1099), credit card payments (don't need 1099), and PayPal payments (don't need 1099). The complexity of all these requirements - especially the exceptions for attorneys, the different rules for various entity types, and the backup withholding obligations - really makes a strong case for the automated solutions mentioned throughout this thread. Having systematic processes and tools to catch these details upfront can prevent so many compliance headaches down the road. For fellow international bookkeepers, don't let the complexity intimidate you - start with the basics (collect W-9s from everyone) and build your knowledge from there!