I’m going to go on just a little bit of a semi-friendly rant here.
If any of my fellow accountants/bookkeepers are reading this, you’re going to laugh, if not cry.
Actual, real tears of frustration.
I have been in this business for 5 years now, and every year I swear it’s going to be different.
Like Lucy, teasing Charlie Brown with that football.
Come on, Charlie Brown, this year you’re gonna kick it a mile.
And every year, wham bam! Flat on his chubby little ass.
What’s the problem?
W-9’s.
This form needs to be provided to ANYONE that you pay, before you pay them.
The problem is the $600 rule.
(IMPORTANT NOTE!: you must STILL pay tax on ALL income, even if it’s less than $600, by law. You don’t get the income tax-free just because you only made $500 from one person. This is a common fallacy, often heard repeated erroneously).
General contractors won’t get a W-9 from a contractor before paying them (almost freaking ALWAYS) because of the excuse that they don’t know if they’ll be paying them $600 that year.
It gets forgotten. Then, they use the subcontractor again. It goes over $600, and still no request for a W-9.
Even when the GC is being advised diligently by their friendly neighborhood bookkeeper that it’s needed.
Repeatedly.
All year.
Then what happens? The procrastinator’s natural consequence.
Rushing around to get W-9’s at the last minute in January.
Just like a kid that had two months to write a report, and crammed in all the work the night before it’s due.
All that excessive stress and bile is harsh on the system.
Don’t even get me started on the whole “the worker refuses to give me one” thing.
If you don’t know what this implies it’s best left to the imagination at this point.
I’m going to ask: does this sound familiar to anybody?
If you’re laughing you’ve been here before, my friend.
What to do?
We actually instituted a policy here to request a W-9 every time our bookkeeper picked up a new contractor on the radar, and you know what?
We’re still asking for a buttload of them in January.
(Insert mournful descending trombone scales here)
We want to serve the client to the best of our ability. Instituting some kind of extra charge for not doing them when asked is not going to generate a lot of warm fuzzy feeling, but we’re at wit’s end here!
If you’re reading this, and you hire independent contractors, I hope this was helpful.
It was kind of a rant, really meant as satirical humor, but with an element of seriousness, too.
Your 1099-NEC needs to be received by the contractor on the deadline, not sent on that date.
This year it’s January 31st, which is a Monday.
So, if I were you, I’d get it done by the 24th. We’re shooting for the 20th, service-wide.
Because of the whole stress/bile thing, you know.
Plus, it’s a very natural way to express gratitude to the people that served you and your business in the preceding year.
Be a good egg. Get your W-9’s, now, and get your 1099’s out.
If I work for you and this is making you cringe a little…
Good! You CANNOT say we haven’t been telling you all year, am I right?
This friendly reminder of a necessary part of American business life was brought to you by Owings LLC.
Your friendly neighborhood business, books, and tax advisors.
Thank you for listening, and have an amazing January.