cloudtax https://cloudtaxmatters.com cloudtax Wed, 20 Nov 2019 13:15:26 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://cloudtaxmatters.com/wp-content/uploads/2019/11/cropped-favicon-new-32x32.png cloudtax https://cloudtaxmatters.com 32 32 How to get an IRS EIN https://cloudtaxmatters.com/how-to-get-an-irs-ein/ Thu, 07 Nov 2019 08:31:37 +0000 https://cloudtaxmatters.com/?p=28 If you are a company thinking of doing business in the US, you will need an EIN. Whether or not you get the EIN as a foreign company or a domestic (meaning formed in the US) has other implications and will be discussed in a later blog.  The EIN is the only number the IRS can use to track a company in the US, and it will be required to complete contracts with private companies, banking information and many other business and government forms. 

Foreign companies can do business in the US without an EIN, but there are special criteria as to what is allowed and other required forms.  This topic will be covered in a separate blog.  If you want to do business more easily here, an EIN will be key.

Because of the importance of this number, the IRS does not make it easy to get one as a domestic or foreign company.  To receive one relatively quickly, a responsible party completing the application must have an SSN, EIN or ITIN and complete the SS-4 online.  You can do that here on the IRS website.  If the information you provide on the application as the responsible person matches to the IRS database and other criteria matches, you should receive the EIN immediately.  

If you don’t have a responsible party who has one of the required numbers, you can’t complete an on-line EIN application, and you will then need to complete a paper SS-4.   Once you complete the SS-4 form you can fax or mail the application to the IRS based on the address your US company will use.  That address or fax number listing is available from the IRS here.  Of course, faxing is must faster than mailing and if you fax you should receive the EIN within 5 business days.

If you are applying for an EIN as a foreign company, there are a number of critical steps that must be included on the SS-4 to have it processed by the IRS.  The IRS doesn’t always share in the instructions everything you need to do to complete an application, but they have lots of reasons they won’t process one which they only share upon rejection.  After completing over 100 of these applications, Cloud Tax Matters can share the know how to get this done timely and offers this as a fixed fee process.

Once you receive your EIN, protect it.  Don’t share it in an email, only provide it to trusted sources, and don’t give it to anyone who calls you on the phone.

Also, only use links that are really associated with the IRS to apply for an EIN, like those above.  There are many services and/or companies who will try to get you to give them your personal information by creating phishing scams.  When in doubt, start at the irs.gov website and link from there to trusted sites.

EIN Checklist:

  1. For speed, use a responsible party who has an EIN/ITIN or SSN and apply on-line.
  2. If you can’t process on-line, complete the SS-4 and fax.
  3. Once received, protect it!

Any questions, reach out to Cloud Tax Matters for help.

]]> Time now to get W-9s from your contractors and certain vendors https://cloudtaxmatters.com/time-now-to-get-w-9s-from-your-contractors-and-certain-vendors/ Thu, 07 Nov 2019 08:30:48 +0000 https://cloudtaxmatters.com/?p=26 As part of your year-end planning process — well it should actually be an on-going process, but more on that later – reviewing who you’ve paid in 2019 and will you issue them a 1099 in January is critical to do now.  Best practices say every vendor you pay for services you should receive a W-9 from them the first time you pay them.  But let’s be real…we’re all busy and that likely didn’t happen.  If it did, stop reading and move to another year end planning tip. 

What’s a 1099?

Because many individual contractors don’t always keep accurate books and records and report all their income, the IRS relies on the 1099 information form to let them know how much has been paid to those providing services who are not companies.  They then add up all the 1099s they receive and match this to what individuals or companies report.  If there is more 1099 income reported to the IRS than on a return, a matching notice is sent.  As you can imagine, not a good notice to receive…basically the IRS thinks they were shorted.    

Why the exclusion for those who are companies? No real guidance on this, but likely as they think “companies” somehow are more likely to report all their income accurately, but like many things with the IRS…a bit of a dated view.

The 1099 is issued in January to any vendor or contractor you have paid more than $600 for services during the following year that is not a company.   There are a few more categories of vendors who receive 1099s – landlords, lawyers – but check back later in the year for a blog about how to easily issue 1099s and who needs them.

How to get ready for 1099s

You can’t always tell from a company name whether or not they are a company, so don’t try and guess.  When you decide to pay a vendor – say for some freelance marketing help – after you sign a contract with them ask them for a W-9.   A W-9 will provide you everything you need to issue them a 1099 – name, EIN/SSN, entity type and address.   If you want to use one of the cloud tools to issue, get a personal email address so you can email the 1099.

Because this is confidential info, you should provide a way for a vendor to upload this to a secure site and/or have them send the W-9 password protected.  Some vendors are not secure with their W-9 info.  All you can do is create the opportunity for them to be secure, if they don’t use it, that’s their concern.  Be sure to provide clear instructions on how to provide it securely.  Also, set expectations that a vendor won’t be paid until the W-9 is received.  Once they have their check, it’s very hard to chase them for the W-9.

Once you have received the W-9, you should store this in a secure environment.  Be sure it is legible and signed.  It will be what you rely on if the IRS questions why you issued a W-9 with certain information if it does not match the IRS’s database.

W-9 Checklist:

  1. During November, review all the vendors you have paid more than $600 for services.
  2. Review the list and see which names you have already received a W-9.
  3. For those you don’t have a W-9 for, email or call them and provide instructions on how to securely supply the W-9.
  4. Follow-up on those you do not receive a W-9 within 5 days.
  5. Check back in December for next steps in preparing for 1099s.

 

Any questions, reach out to Cloud Tax Matters for help. 

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