How to Fill Out a W-9 for an LLC

Last updated on March 16, 2023

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If you always experience a hard time or avoid filling a W-9 for an LLC, it’s your lucky day. This article will show you how to fill out a W-9 for an LLC. Filling out a W-9 is vital knowledge every LLC owner should know.

As long as you work with clients, you’ll need to fill it for the sake of federal tax compliance. But here’s the dicey part. LLCs don’t necessarily need to fill out a W-9 form in some contexts. However, knowing when a W-9 form is needed can be tough. Here’s how and when you need to fill out a W-9 for your LLC.

W-9 Form: Use and Purpose?

Let’s start from the beginning. What is a W-9? If you’re new to the world of LLCs, you should have come across a W-9 form. For starters, this form is fondly called the “request for a taxpayer identification number.”

It is a form that collects all the data and information that your business partners need to record every payment they make to you. In the long run, this information would come in handy when your business partners need to fill 1099 during tax season. So, it would help if you learned how to fill out a W-9 for an LLC.

This document aims to help the Internal Revenue Service track how many times your business partner paid you. It also shows them how many times they made payments to you. The W-9 form is important for certain LLCs for tax record purposes.

As a business owner, you have to provide a W-9 to your clients. It makes their record keeping easy. Significantly, a W-9 is useful for your clients when they pay you up to

$600 or more within a year. In essence, they would need to report their taxes.

You could argue that your client’s information is readily available online. However, a W-9 requires the signature of the vendor. This verifies some information. For instance, it verifies the tax identification number as correct, among other things.

Now, beyond LLC and business partner use, the W-9 has other uses. For instance, a W-9 is also used in other transactions like real estate or student loans.

W-9 Form: Who Needs It?

Now that you know what a W-9 is, the next question is, “who needs it?”. Generally, LLCs need to fill out a W-9, especially if they have received over $600 in payment from a business partner to whom they rendered their services.

But LLCs aren’t the only ones that can be asked to fill a W-9. If you freelance or work as an unemployed contractor with a large corporation, you’ll be asked to fill out a W-9 once your payment within a year amounts to $600 and above. That’s one major reason to learn how to fill out a W-9 for an LLC.

Other incorporation that might need a W-9 to harvest their details includes general partnerships, S and G-corporation, and other independent contractors.

Details on a W-9 Form

In case you’re curious, certain details are required on a W-9 form. Here are a few:

1. Name - Line 1

The information that goes into line 1 is your name. You must ensure that the name you write here is the same as the name on your tax return.

2. Business name - Line 2

This line is optional. In essence, you should only fill it if the taxpayer has a DBA name, disregarded entity name, business name, or a trade name.

3. Federal Tax Classification - Line 3

Now, this part might be dicey. But its requests how the LLC classifies itself. There is a couple of tax classification for the taxpayer.

These classifications include- single-member LLC, corporation, LLC, trust/ estate, sole proprietorship, or individual. Note that the taxpayer can’t select more than one tax classification.

4. Exemptions- Line 4

The fourth line of the W-9 form is dedicated to filling in exemptions. For example, if you are exempted from backup withholding, here is the space to state it.

5. Zip code, Address, city, and state code- Line 5 & 6

In line 5, you’ll have to fill in your address details. This is to ensure your business partner mails your information returns to you successfully. Line 6 narrows it down. It allows you to add your Zip and state code.

6. Account number- Line 7

This line is usually optional. But you must fill in the necessary account numbers if you see it.

7. Tax Identification Number- Part 1

The goal of the W-9 is to get the taxpayer’s Tax identification number or social security number. As soon as the information required above has been filled out, the taxpayer has to sign in part 2.

Knowing these details shows you how to fill out a W-9 for an LLC. Once everything has been filled out, both parties must monitor the document closely in transit. It carries vital information that can easily lead to identity theft if care isn’t taken.

Non-Compliant W-9 Form: Penalties

Your W-9 must comply with the reporting requirement set by the IRS. If it doesn’t, taxpayers are liable to a $50 file per every non-compliant instance. But the tax authority would waive the penalty if the taxpayer can prove that the non-compliance wasn’t a result of neglect.

Another case of non-compliance occurs when the taxpayer provides wrong information that initiates improper withholding. If this happens, they could be made to pay up to a $500 fine. In extreme non-compliance cases, taxpayers could suffer criminal penalties.

In a case where an LLC receives a W-9 from a business partner that seems unexpected, it’s best to launch an investigation. Before filing it out, you have to be sure there’s a legitimate reason for this.

How to Fill Out a W-9 for an LLC

Now that you know the details required from you in a W-9 form, filling it out would be a breeze. Here’s a step-by-step guide on how to fill out a W-9 for an LLC:

1. Fill out company details

Start by filling out your LLC’s details. Depending on the type of LLC your business is, you should fill in your legal and business name.

Your name takes up the first line, and your LLC’s name enters the second, especially if your LLC is a single-member LLC.

But multi-member or S corporation businesses should put their business name in the first line. You’ll also need to fill in your business address, state, and Zip code.

2. Correction Tax classification

The next step is to fill out your tax classification. To successfully pull this off, you’ll need to highlight the appropriate tax classification of your business.

Remember, there’s the sole proprietorship (best for single-member LLCs). There’s also the partnership classification that suits multi-member LLCs.

3. Fill out the SSN or EIN

The next stage is to fill out your taxpayer identification number. This is either the SSN (Social Security Number) or the EIN (Employee Identification number). SSN is appropriate for single-member LLCs without the C or S-corp status.

But if the single-member LLC has done the election required to be regarded as a different business entity, it would be appropriate to use the EIN of the company.

Individual Taxpayer Identification Number (ITIN) could also work but for a unique category. In that case, the person filing the form is not a US citizen but a resident alien.

FAQs: How to Fill Out a W-9 for an LLC

Is a W-9 Required for an LLC?

Yes, LLCs are required to fill out a W-9. That’s why you should learn how to fill out a W-9 for an LLC. It is an important document that certain types of businesses are required to fill. Specifically, if these businesses offer services to another business on contract, they must fill out a W-9 to acquire tax-related information.

Can single member LLC use EIN on W-9?

As stipulated by IRS, a single-member LLC can’t and shouldn’t use EIN when filling the W-9 form.

Is an LLC Better than an S Corporation?

LLCs and S corporations serve different contexts. You’ll be better off with an S corporation if a lot of people would run the business. With an S corporation, the board of directors can also be employees. At the same time, they receive cash dividends from the profit the company makes.

Does an LLC Need 1099?

It depends. For starters, LLCs are pass-through companies for taxation. So, if an LLC prefers to be taxed as a partnership and receives up to $600 as payment for a service, it should be issued 1099.

Who Signs a W-9 for a Corporation?

Anyone who would sign the WP for a corporation has to be a US citizen. This includes a US resident alien. In addition, the individual must have the approval of the organization to sign the W-9.

What Tax Classification Should I Use for My LLC?

There are a couple of tax classifications you can use for your LLCs. You can classify it as a “pass-through” C or S corporation.

Conclusion: How to Fill Out a W-9 for an LLC

Now that you know how to fill out a W-9 for an LLC, it should no longer feel like an arduous task. Hopefully, you also understand when you’ll need to fill it for your LLC. Filing a W-9 for an LLC is not tough. You just need to have all the correct elements in place.

In addition to learning how to fill out this form for your business, you should know that you can’t have just anybody fill out the W-9 for your LLC. It won’t be invalidated if the person is not a US citizen. So, before you do anything about this topic, ensure you get all your facts right.

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