Discover what a W-9 is and why both small and large businesses need to collect them. Learn how to simplify the process with e-signatures.
There are a few other types of tax forms you may need to use to report who you are paying each year, how much, and how much you are withholding from their pay.
Businesses must use Form 1099-MISC at the end of the year to report the total amount of non-employee compensation paid to a contractor. The MISC refers to miscellaneous income earned by freelance or self-employed workers. There are many types of 1099 forms used to report income to the IRS, such as income earned through interest on a bank account, cancellation of debt, proceeds from real estate transactions or mortgage interest, and more.
This form serves the same purpose as a W-9 but for your regularly employed workers for whom your company pays social security and income taxes. Have all new employees sign this form to verify their personal tax situation (exemptions, status, etc.), so you know the correct amount to withhold from their paycheck.
A W-2 is similar to the 1099-MISC, except in regard to your W-4 employees. Like the 1099, it’s part of the “information return” your company must provide to the government. The W-2 names how much was paid to those employees that year and how much was withheld for their taxes, Medicare, and Social Security. It should be given to the employee and the Social Security Administration (who then passes it to the IRS), and it helps ensure your employees receive any income tax return owed to them.
Send a blank W-9 form to your contractors digitally to make it easy for them to fill it out and send back. The Adobe Sign Library contains free downloadable templates for Form W-9 and other important tax documents you might need to send, like the Form W-4 and the IRS I-9 Employment Eligibility Verification.
For business owners, time-saving digital processes for W-9s and employment contracts are a must. Merck KGaA wanted to alleviate administrative headaches so employees could spend more time on issues than paperwork. By implementing an electronic signature process with Adobe Sign, they saw a 1,400% increase in faster time to signature.
When it comes to collecting and securely storing important documents like W-9 forms, Adobe Sign removes the steps of printing out and filing physical paperwork, resulting in faster turnarounds. Plus, you can store completed forms securely in Adobe Document Cloud for easier access to critical information.