If an employee or contractor fails to provide you with the correct information on their W-9 form, it can delay the process of getting their 1099-MISC form completed. A Tax Identification Number is an identifier that helps the IRS understand which form goes with which contractor, employee, or business. Each person or company has their own TIN and without it, forms like the 1099-MISC form cannot be reported. A person can verify another person or business’s TIN without permission, unlike a Social Security Number, which is private.
When Filing for Tax Exemption Status
If your organization or your business is trying to file for tax exemption status, it is important to have a valid tax identification number. Organizations that are dedicated to serving the public are usually the common reasons for tax exemption status. Organizations like this include places like churches and other religious places of worship, or charities.
Tax exemption status means that for each taxable year, an organization pays a reduced amount of their taxes than other companies would. This status can be revoked if an organization lies about or is unaware of the validity of their tax identification number.
Establishing a Business
There are many business structures you can use when establishing your own company, but if you have an invalid tax identification number or no TIN at all, your choices for business structures are severely limited. Those without tax identification numbers are not allowed to establish a corporation or a partnership. This also means that business owners will not be exempt from taxes. If you are looking to establish one of these businesses, make sure that your TIN is valid.
This will be helpful when hiring employees, as well. When it is time for you and your employees to file your taxes for the most recent year, you will all need a TIN for yourselves as individuals, as well as the tax identification number for the business. Without it, the IRS will be alerted that your company is not a legitimate corporation or partnership, and you could lose your tax exemption status, among other things like the protection of your assets and liability from debt.
If you are self-employed, otherwise known as a small business owner or an independent contractor, you should think about setting up your own retirement plan. With a retirement plan, you can start saving up for a pension plan and a 401(k). Because the filing process for a retirement plan is different for self-employed individuals, each person should have a tax identification number so that their unincorporated company can sponsor their retirement plan. Without a TIN, you will not be able to enjoy these benefits.
When you are ready to check you TIN, go to wage filing’s website. With their TIN checking services, you can make sure there are no mismatched TINs with names or companies. If there are, you can also see what kind of penalties are set by the IRS, which can help you prepare for any complications with your clients or employees. Wage filing is very reliable and professional, so you can be sure that all of your information is kept private.