The IRS Form W-9 is important for small business owners. You will need this whenever you hire an independent contractor for your business. It’s a good idea to have all independent contractors complete this form before you pay them.
As a company you will use the information provided by the independent contractor to prepare the Form 1099-MISC, reporting to the Internal Revenue Service the amount of income that was paid to the independent contractor by your company. The W-9 form also contains boxes to check showing how the contractor’s business is legally organized. This includes sole proprietor, C Corporation, S Corporation, Partnership, or Limited Liability Company. When contractors sign the W-9, they certify under penalty of perjury that they have completed the form correctly. They also certify they are not subject to backup withholding and are a U.S. citizen. The IRS states that anyone that receives payment of $600 or more over the course of a tax year needs to fill out the Form W-9. The best rule in practice is to collect the form anytime you pay someone for anything, even if it’s below the $600 threshold. The Form W-9 does not have to be filed with the IRS. It will be important to maintain the signed form in your files. Completing Form W-9 is pretty straightforward. The contractor should just indicate the business name and their employer identification number (EIN), also known as the tax ID number. When the form is completed, the contractor is certifying to the IRS that the tax ID number being provided is correct and accurate. When running your own business you may have to hire independent contractors and this process requires you to track and maintain files in order to run an effective and compliant business. Make no mistake, your business staff and management team should have a clear understanding of what the W-9 form is and when to use it.
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3 Top Benefits to Outsourcing For Small BusinessesWhile you might think that only large and multinational corporations - can benefit from outsourcing, small businesses can potentially realize even bigger outsourcing benefits because of how many new jobs are actually being created within smaller companies. According to the Small Business Administration, companies with less than 500 employees account for almost 65 percent of new private sector employment.
Outsourcing refers to the way in which companies entrust the processes of their business functions to external vendors or small businesses. There are many benefits of outsourcing your business processes.
Building a business includes more than just picking a location, developing a business plan, building a website or picking your social media platform. Some of you may be asking what could be more important. Well, I'm here to tell you that opening a business bank account should be on your top 5 of "things to do" list. Having a business checking account can help you deal with tax, legal and practical issues. Many business owners choose to manage their business and personal finances within the same bank account for the purpose of convenience and but fail to realize the advantages that come with managing a separate business account. A major reason that companies use bank accounts is for internal control. Here are a couple of the control advantages of using bank accounts:
Keep in mind, the Internal Revenue Service (IRS) is really picky about business owners being able to show that their business is really a business and not a hobby. Basically, you have to show a profit on Federal Tax Form Schedule C three years out of every five. Having a separate business bank account established further proves you are a business and not a hobby business. As your business grows, it becomes critical to build a proper legal and financial foundation. Opening a separate bank account is one small step in that direction, and will help keep your accounting records organized.
Cash doesn’t always flow how you need it to. It can start from customers who pay late to suppliers who have suffered some kind of setback. Building a cushion in your bank account isn't a complicated concept, instead of having just enough to pay bills and staff it is time to have a larger amount in the account. An amount that will not only allow for timely payments of monthly billings but enough to transfer into savings. Maintaining a smooth cash flow requires juggling many aspects of the business such as staying on top of “pending cash”, also known as accounts receivable, to -
Cash flow is the life of an organization, it’s a means to pay salaries, buy supplies and make stock investments. As the statistics have shown, owners who cannot efficiently manage their business cash flow are almost certain to fail. To improve cash flow and sustain growth it will be important to build a cash cushion. Having cash reserves enables companies to cope with a business disruption, deal with seasonality, and manage slow-paying customers. It allows a business to take advantage of new opportunities should they arise, and plan for future growth by having investment capital available. Here are just a few tips on how to business owners can boost their cash flow:
The efforts to implement meaningful changes within the business will be a combination of lessons learned. Building and keeping an adequate accumulation of cash provides maximum opportunity and flexibility to any business. Fontenot & Associates Solutions, LLC recommends identifying the method or strategies which work for your business culture. Building a stable long-term business means having sufficient liquidity and a developed and executed form of policy and procedures with clarity defined goals. Can you recall the last time you encountered a brain freeze? The thought of Accounting may cause brain freezes for new entrepreneurs but the basics I’m about to share with you will ease the pressure of what Accounting means to your business when getting started.
Here are five ways to understanding Accounting in your business: 1. The business structure must fit It is up to you to choose which kind of structure is best for you and your business, but the importance to the process is not to guess with your selection. This decision matters to the tax structure your business will be obligated to understand and to the amount of paperwork to complete. The most common forms of business are sole proprietorship, partnership, limited liability company (LLC) corporation and S corporation. Each form comes with different tax consequences, you will have to make your selection wisely and choose the structure that best matches your business needs. Below are some of the tax implications to the most common business tax structures:
2. Business activity needs a bank account The ability to maximize your business revenue starts with understanding what is required to be reported. The separation of business income and expenses from personal is by far one of the most important actions to take first. This can be accomplished with the setup of a new bank account exclusively for your business. Many banks offer an introductory period of free banking which could be a few months or longer but it is key to understand what that means for your business after the introductory period. Don’t feel obligated to open a bank account with your current bank, get the best deal and setup for you and your business. In order to open a business account, you’re required to have a business name, which may be a DBA or one of the common business structures formed and registered with your State. Do your research on bank requirement. 3. Budget with the funds you have As a new entrepreneur you may see a budget as a future goal or task for your business but that is far from the truth. You are certainly spending money when starting a new business thus why not understand how much you can truly afford to spend. The first three months of the business can be the most critical time frame to identify how much income is necessary to manage and maintain as well as how much you can afford to spend on business expenses. Allow your budget to be your weekly or monthly resource to understanding your business cash flow. 4. Track your expenses as they occur It’ s one thing to say you are in business and another to develop a habit of consistency to track your expenses. More often than not you may find yourself meeting and building relationships with new clients, traveling to a speaking engagement or replacing supplies with the use of your personal debit banking card or credit card. If you miss capturing these cost, not only will your business pay more tax than necessary but you also do not have a good record of how much your business is costing you. 5. Get paid for your services You are contracted to complete the work, now its time to get paid. Have a payment policy in place which screams “professional” to clients and helps ensure that you and your clients are on the same page right front he outset, says John Rampton, VP from Entrepreneur Magazine. You may also consider offering customers a discount for paying invoices early, can help you get paid more quickly too. For instance, if you usually policy is to have payments due in 30 days, offer a small discount such as two percent to customers who pay within 14 days. You don't have to build your business alone. Allow us to eliminate the brain freezes you or your management team encounter when it come to planning for financial stability and growth. Let's discuss a more efficient way to set your business financially apart! We are scheduling consultations now, email [email protected]. |
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AuthorMy mission is to offer the best accounting and operations solutions and tips for entrepreneurs and small to mid-size companies worldwide seeking to close their process gaps with actual solutions. |