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Hi, I’m Donna Bordeaux with Calculated Moves. What happens if you can’t get a W-9 from a vendor where you need to issue a 1099? Well, first off, as a matter of rule, I want you to always make this easy on yourself by collecting the W-9 before the payment is issued before I know that’s difficult and it puts an extra bump in the process, but it will save you a ton of time and a ton of resources in trying to collect this information later on, it gets very difficult to collect and find these folks at the end of the year. So save yourself the trouble to begin with. Let’s just fix that problem from the start. But if you do have a case where you did not get the W-9 and you cannot find the person, you cannot get them to cooperate and give it to you.
What should you do? Well, first off, I want you to document every attempt that you make to get that W-9 and keep that information on file. If you’re ever asked by the IRS, you want to be able to at least provide documentation that you tried your best. Now you cannot issue a 1099 to somebody without having a federal ID number or social security number, a name, and an address. Those are the absolute minimums. So do your best to try to gather that information. There may be other ways you could obtain that information, by all means, if you’re ever going to have a future payment coming up to that vendor, don’t issue the payment until they give you the W-9. So keep that documentation on hand. If you just can’t get the 1099 information to prepare and utilize that to talk to the IRS, if it ever comes up.
The other alternative is that you may not be able to deduct that expenditure. If you can’t issue the 1099, the IRS does come back in cases and make adjustments to return to. If you don’t issue those 1099’s, they’re serious about this, because that usually means that this other person that you’ve paid this money to is avoiding taxes. So they’re serious about it. They have strong penalties for not complying with issuing 1099’s. Another alternative method that I’d suggest is, guess what? You don’t have to issue a 1099. If you will pay people by credit card, by PayPal, by some process that goes through a merchant service, because then it changes that information gathering process over to the merchant who will have to gather that information. And you won’t have to issue the 1099 so require that they have a PayPal account and pay them that way. If you want, those are some alternatives for you to make life a little bit easier. I hope you have a great day. If you have any questions about this process, please feel free to comment below I’m Donna Bordeaux with Calculated Moves.
Donna Bordeaux, CPA with Calculated Moves
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.