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5 Min. Read

Why Would a Vendor Request a W9 Form? Purpose Behind the Need

Why Would a Vendor Request a W9 Form? Purpose Behind the Need

Tax time reporting involves dozens of forms, all with their own names and numbers. If you’re a business owner, you’ll have to manage all of these, and keep everything from slipping through the cracks.

One of the most important forms is the W9. Each employee or vendor must complete this simple, one-page form when they’re first hired. This ensures that you, your employees, and your vendors, maintain compliance with the law.

Here’s everything you need to know about W-9 forms, and why a vendor might ask you for one.

Here’s What We’ll Cover:

What Is a W9 Form?

Do I Need to Get a W9 From My Vendors?

Do I Ever Need to Get a New W9?

So, Why Would a Vendor Need This Information?

Key Takeaways

What Is a W9 Form?

A W9 form is a form an employer or client files with the IRS every year. It serves as a record that a business has paid out funds to somebody. The W9 is only one page long, and asks for a small amount of information. In addition to the vendor name and address, it will also require a Social Security number. If the vendor is not an individual or sole proprietor, they’ll need to fill in their taxpayer identification number (TIN) instead.

The purpose is to create a record of the business relationship. When you make reportable payments, you’ll then have a correct taxpayer identification number. This makes backup withholding simple.

Do I Need to Get a W9 From My Vendors?

Yes. You should get W9 forms from vendors, employees, and independent contractors. Essentially, any business relationship where you are the payor. Even vendors who are exempt from backup withholding will still need to fill one out. They’ll simply enter an exempt payee code to provide a record of the vendor relationship. They may even leave every other field blank. That way, you have everything you need when it’s time to file your taxes.

The only vendors who don’t need to fill out a W9 are foreign vendors. These entities will need to fill out W-8 forms instead.

Under most circumstances, you will need to fill out a Form 1099-MISC or 1099-NEC at the end of each calendar year. This serves as a record for how much you paid out. That said, if you did not make enough reportable payments, you wouldn’t need to fill out 1099. Good accounting software will alert you when 1099 is necessary.

Make sure to get your W9 from each vendor as soon as possible. Keeping your tax documents in order is easier than scrambling to get them together at the end of the year.

Do I Ever Need to Get a New W9?

In most cases, you will be able to use the same W9 from year to year. That said, there are certain times when a change is necessary. In the case of employees, this is rare. It would normally only happen when someone gets married and changes their last name.

In the case of an independent contractor or corporate vendor, there could be several other reasons. For example, a sole proprietor could form an LLC, or a company could change its business address. A vendor may even spin-off from another company and receive a new TIN.

So, Why Would a Vendor Need This Information?

It’s easy to understand why a W9 is important for your business. You need one for every vendor and every employee. But why would a vendor ever need to get that information from you?

There’s really only one reason this might be the case, and that’s if you’re buying goods and reselling them for a commission. For example, if you’re selling for a company like Tupperware or Avon, they might need a W9 from you. But in that case, it’s because they’re paying you a commission. In other words, they’re asking for your W-9 information in the capacity of an employer, not in the capacity of a vendor. Even so, this requirement only kicks in if you buy more than $5,000 of goods for resale. If you’re selling the odd makeup palette on the weekends, you may not even hit that level of spending.

On a somewhat less savory note, some vendors may do this as a roundabout method of employer identification. In that case, you should push back. There’s no reason to give someone your Social Security number or TIN unless there’s a legitimate reason. Moreover, most legitimate companies would never make this kind of request. Most likely, it’s just someone in an office who made a mistake.

Key Takeaways

The W9 form is undoubtedly an essential part of any US business. You need to keep them on file, and you need to reference them when calculating tax withholding. That said, there are few situations in which a vendor would ask a client for one. Outside of those scenarios, the W9 is strictly for employer compliance.

If you found this article helpful, check out our resource hub! It’s jam-packed with advice, guides, and informational blog posts like this one. Everything inside is designed to help business leaders as you succeed.


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