Transcription
In this video, I'm going to teach you how to complete a W9. No matter how your business is taxed, you could be a sole proprietor, a sole proprietor with a DBA, also known as a fictitious name or a soup name or or trade name, even a single member LLC or multi-member LLC that is elected to be taxed as an S corporation, and even a C corporation who has been elected to tax as an S corporation. So, no matter which category you fall into, I'm going to teach you how to complete the form.
So, let's say you're a YouTuber, an affiliate marketer, uh a gig economy worker, a freelancer, or even any other type of contractor or business owner. You've likely been requested to complete this W9. And once you saw the form in true IRS fashion, you looked at it and you were like, "Okay, I just need to complete this half a page of information." And then it's followed up with over five pages of instructions. So, admittedly, it can be quite confusing, but don't worry. I'm here to clarify all that for you. And I'm actually going to share my screen here in a moment and complete the document with you so you know exactly how to complete it for your business type.
But before I do so, if it's your first time watching, my name is Na'vi Mirage. I'm a CPA and tax strategist who normally creates videos on tax strategies and how to save thousands of dollars in taxes. I do this by creating free content right here on social media. But I also do it in a much more detailed through a course where I convert business owners just like you from knowing nothing about taxes and change them and convert them into tax-savvy entrepreneurs who save thousands of dollars each and every year. like Darcy who saved $20,600, Clinton who saved almost $26 grand and Sarvin who saved $23,000 and there's Jeff who saved over $25,000, Daniela and her husband close to $50 grand and Valerie who's saving $10,000. But if you want to learn more about the course, you can click on the link in the description below or visit my website at navimiro.com.
Okay, back to the W9 form. Let me briefly explain why you're even being asked to complete this. Okay, and the reason is this. Basically, if a business is going to be paying you for services that you're performing for them, that business may need to issue you an IRS form called a 1099 in January, which will inform the IRS how much they paid you during the year uh for the for the prior year, right? So, they're going to send this in January for how much they paid you in the prior year. And by having you complete the W9 form, the business issuing you the 1099 now will know the proper name, the tax ID number, and address to issue it to. Okay, so does that make sense?
Let's go ahead and cover the first scenario, which is the sole proprietor doing business in your own name. Okay, so on my screen here, we can see I'm just assuming your name is John Doe. And what you're gonna do is in line one here, you're just gonna put your full legal name. Okay. And then in box 3A, you're going to select that you're an individual/sole proprietor. That's the box you're going to click. You're going to put your address here. And then now, technically speaking, you can put either your social security number or your employer identification number if you applied for one. Now, the IRS will tell you that they prefer the social, but they say that you can enter either one. I'll show you that here in just a second, but let me show you schedule C because we want to read the instructions here. It says name of entity/individual. An entry is required for a sole proprietor or disregarded entity. Enter the owner's name on line one. Um and then uh a disregarded entity on line two. And so if you look at your schedule C when you're a proprietor, your first name, your legal name and your last your last name is is here. Okay? So that's why we're using uh John Doe because that's your first and last uh name and that's what we're putting on form W9. Okay, we're obviously not putting both, right? The social security and EIN number here. Okay, but many people will say, "Oh, well, I thought I was supposed was was the social or the EIN." Let me just clear this up right now and show you the instructions. So, on the same form W9 form, if you scroll down to page five, right here, it says what name and number to give the requestor. Okay? And so, it says number six, sole proprietor or disregarded entity owned by an individual. The name you're going to use and the social of the owner. Okay? right here. But there's a little uh number three. And if you read number three, it says you must show your individual name on line one and enter your business or DBA name, if any, on line two. You may use either your social security number or EIN if you have one, but the IRS encourages you to use your social security number. Okay, so there you have it. It's right there in the instructions. You can use either or one. The IRS recommends that you use your social security number.
Okay, our next scenario is a sole proprietor with a DBA. John Doe, but John Doe registered with his state and he doesn't want to be called John Doe or he doesn't want his uh customers writing a check to John Doe. He's still a sole proprietor. He doesn't have an entity, but he registered a uh doing business as name. All right, that could be called an assumed name or a trade name or a fictitious name agreement depending on your state. But the business um assumed name is Sunshine Landscaping. Okay. Now, in this scenario, uh they can put Sunshine Landscaping in line two, but they're still selecting the individual/sole proprietor box. Address is the same. And again, just like I went over before, you can use your social security number or your EIN if you were issued one. Uh you're definitely not going to complete both of these. That will just confuse the person who you're sending this to. And you're going to uh enter in uh your social security number is what's preferred. The IRS prefers that you use your social security number here.
Let's move on to the next category, which is you're a single member LLC, still taxed as a sole proprietorship. So, you went to your state and you formed an LLC. So, you have a business entity and but your default tax treatment is to be taxed as a sole proprietorship. In case you didn't know that, that's how it works. If you if you [snorts] form a single member LLC, then by default, your business is called a disregarded entity and you're still taxed as a sole proprietorship. So, how are you going to complete form W9 in that scenario? Well, it's the same as before. Box one, it's going to be John Doe, your full legal name. And box two, you can put your disregarded entity name, which is Suni Sun Sunshine Landscaping uh LLC. Here, box 3A, we're still checking individual/sole proprietor. We have our address, and once again, we can either use our social or our EIN. The IRS prefers in this example that you are using your social security number. Again, I showed you in the instructions where you can look that up if you care to uh you know, if you don't believe me, you can check it check it out and see is it social security number or EIN that you want to put there. Okay, let me show you what your tax return would look like. If you have a schedule C and you have an entity, you're still going to be putting John Doe here as the name of proprietor. And then line C, you can put your business name, which is Sunshine Landscaping LLC. This is why right here the name of the proprietor being John Doe. This is why on the form W9 we're putting John Doe on line one. Okay.
Our next scenario which is multi-member LLC which by default if you form an LLC that has more than one member on it, you are taxed as a partnership. Okay. So let's look at this tax form and how we're going to complete this. So now on box one we have Sunshine Landscaping LLC. And I just told you this has multiple members. And now what we're going to do is in box 3A, we're going to select the LLC box and put our tax classification here, which is a P for partnership. We can put our address. And now for sure, there's no question. We're no longer putting a social security number here. We're putting our employer identification number. Okay? And if I show you this on a tax form, which is the partnership tax form, you can see that the name of the partnership here is Sunshine Landscaping LLC. And you would have a EIN number listed here. And that's the EIN number that would you would list on form W9 if someone was requesting this from you.
Now, what if you formed a single or even a multi-member LLC, but you filled out a form called form 2553 and you elected to have that single or multi-member LLC taxed as an S corporation. Let's cover that next. What we're going to do in that scenario is we're going to put the name of our entity in box one, Sunshine Landscaping LLC. We're in box 3A. We're going to check LLC. But now we're letting the IRS know or actually the person requesting this form from us know that hey, our LLC is taxed as an S corporation. We have our address and we're definitely again using the EIN number down below. We're not um entering our social security number. So that's how you would complete this form if you formed an LLC and you elected to have that LLC taxed as an S corporation. Let me show you on your S corp return what this looks like. Again, we have the S corp return. Sunshine Landscaping LLC is what's written here, not the individual's name, and we would have an EIN number listed here as well.
Now, let's talk about um our probably last scenario here. What if you filed a corporation? So, you went to your state and you filed it inc. So, you have Sunshine Landscaping Incorporated, but then you elected to have that corporation taxed as an S corporation. How do you complete this form in that scenario? Well, we're going to put Sunshine Landscaping Incorporated, right? Because that's how we registered with the state. But now, we're going to check uh the S corporation box in box 3A. We didn't form an LLC, so we're not checking the LLC box. Okay? We're going to go straight here and collect and excuse me, select S corporation. We have our address. We have our employer identification number. And if you were looking at your tax form for this situation, again, it's 1120S, but instead of LLC, we have here we have uh incorporated, right? Sunshine Landscaping Incorporated. Okay.
So, with that said, maybe you learned something. I hope you did. If I said something that contradicts what you've heard, I just showed you where the instructions are that explain why I say what I say in this video about how to complete the W9 properly. Don't forget to uh sign and date the W9 form. That's very important. When I receive these from my clients, I get them unsigned all the time. It's very frustrating. Make sure you sign and date the document as well.
So, if you found this video helpful, look for my other video related to this topic, which is all about form 1099. And if you need to issue a 1099 to any of your vendors, in that video, I teach you how to pay your vendors and contractors in a way that allows you to avoid collecting the W9 or issuing the 1099 to them. So, definitely give that video a watch if you want to stop dealing with W9's and 1099s in the future. All right, so with that said, I'll see you in the next video.