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GSBS W9 Process & Instructions

Video Instructions

Overview - Annual W9/1099 High-Level Process

  1. For each client with 1099s in their scope of engagement, we track ALL vendors who have been paid $600 or more on a Google Sheet (located in each client's Shared Google Drive in Forms and Miscellaneous Information\Vendor W9s & 1099s\ABCD - Vendor W9 List). The purpose of this Google Sheet is only to:
    1. track which W9s we have on file
    2. track which W9s still need to be requested from the client
    3. track which vendors need to be sent a 1099 at the end of the year
  2. Every mid-quarter (Feb, May, Aug, Nov), an Asana task will be due that directs the bookkeepers to determine who needs to be sent a W9 using data in QuickBooks Online
  3. Bookkeeper adds any new vendors that are > $600 YTD as a new row on the spreadsheet
  4. Bookkeeper updates each vendor's profile in QuickBooks Online
  5. The bookkeeper sends list of vendors that we don't have W9s on file for to the client, attach blank W9 PDF, and ask the client to reach out to the vendor to fill out the W9 and return it to us.
    GSBS does NOT communicate directly with vendors for W9 information.
  6. If the client responds, the bookkeeper does the following:
    1. files the W9 in Google Drive
    2. updates the Google Sheet
    3. attaches the W9 to the vendor profile in QBO.
  7. Each new year that passes, Systems Administrator adds an additional column to each of the spreadsheets for the new year

Overview - Vendor W9 List Google Sheet

Here is the structure of the Google Sheet:

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Here's a description of each column on the Google Sheet and what to enter:

    1. Name of Vendor - Enter the name of the vendor as it appears in QBO
    2. W9 Requested? - Mark this as Yes or No
    3. W9 Received? - Mark this as Yes or No
    4. Type of 1099 Required - Choose between 1099-MISC or 1099-NEC
      1. 1099-NEC: Non-Employee Compensation - this is the most common type of 1099
      2. 1099-MISC: For payments to a lawyer or a landlord for rent payment
    5. Were there any non-taxable payments to to vendor? - Mark this as Yes or No
    6. 2022 > $600 - Mark this as Yes or No depending on how much was sent to the Vendor during this year
    7. 2023 > 600 YTD? - Mark this as Yes or No depending on how much was sent to the Vendor during this year
    8. Notes - Enter any information about payments that were sent to a vendor that are non-taxable or that should be excluded from an end-of-year 1099

Step 1 - Determine Which Vendors Need to Be Sent a W9

  1. Open the client's Vendor W9 Google Sheet in their Shared Drive: Forms and Miscellaneous Information\Vendor W9s & 1099s\ABCD - Vendor W9 List
  2. In QuickBooks Online, go to Reports and search for the Expenditures by Vendor Summary or Expenses by Vendor report. Run this report for Year to Date.
  3. Sort the report by Total in descending order and ignore any vendors with a total of less than $600
  4. Ignore any vendors that are any of the following:
    1. Corporations (except for attorneys' fees)
    2. S-Corporations
    3. Tax-exempt organizations, such as 501(c)(3) nonprofits
    4. Government entities
  5. After filtering out vendors from the step above, do the following for each remaining vendor:
    1. For any vendor who has been paid > $600 YTD, add each vendor as a row to the client's Google Sheet, if not already present
      1. We only need to track payments made by cash, check, ACH, or other electronic funds transfer. We do NOT need to include any payments made by credit card.
    1. On the Expenditures by Vendor Summary report in QBO, click the total number to look at the payments made
      1. Determine if any of the payments were either a reimbursement or benevolence
    2. Fill out all columns for each new row added
      1. If ALL of the payments made to the vendor were either a reimbursement or benevolence, then select None for Type of 1099 Required
      2. If only a portion of the payments made to the vendor were either a reimbursement or benevolence, and the remainder of the payments are > $600, then select Yes for Were there any non-taxable payments made to vendor? and enter the following in the notes field:
        1. Date of each non-taxable payment
        2. Type of payment (reimbursement or benevolence)
        3. Amount of the payment
      3. If NONE of the payments made to the vendor were a reimbursement or benevolence and the total of payments made is > $600 YTD then move to the next step
    3. Fill out the rows on the spreadsheet as necessary
    4. For each vendor, if the type of 1099 required is Yes, then open each Vendor's profile in QBO and check the “Track payments for 1099” box
  6. From the Google Sheet, gather a list of vendors with a No in the W9 Received? column (this could likely include vendors that we have previously requested W9s for)
    1. Send this list of vendors to the client, attach blank W9 PDF, and ask them to request that each vendor fills out and returns a W9. Ask the client to forward back to us any W9s they receive from vendors.
    2. Update the W9 Requested? column in the Google Sheet
  7. Reminder: GSBS does NOT communicate directly with vendors for W9 information.

Step 2 - Once the client responds with the filled out W9

  1. Save a copy of the W9 in the client’s shared Drive (Forms and Miscellaneous Information\Vendor W9s & 1099s\W9s) with the name of vendor as the PDF file name.
  2. Take a look at the W9 and determine if a 1099 needs to be sent at the end of the year (See Step 1, item 4 for clarification)
    1. Update the W9 Received? and Type of 1099 Required columns in the Google Sheet
  3. Open the vendor profile in QBO and do the following:
      1. If a 1099 is needed for this vendor do the following:
        1. attach the W9 under Notes and attachments
        2. enter the vendor's SSN or Tax ID in the Business ID No. / Social Security No. field
        3. make a note similar to this, replacing the date and your initials: 2/27/23 Per W9, Individual/Sole Proprietor, 1099 needed. JD
      2. If a 1099 is not needed do the following:
        1. Uncheck “Track payments for 1099” box, if applicable
        2. Make a note similar to this, replacing the date and your initials: 2/27/23 Per W9, S-Corp, 1099 not needed. JD.

Notes

  1. If the client doesn’t reply to your emails or the vendor doesn't return a W9, just wait until process recurs the following mid-quarter. Each mid-quarter you will send a comprehensive list of vendors that we need W9s for.
  2. Scenarios where vendor does not need to fill out a W9:
    1. If the payment is for benevolence or a reimbursement
    2. If we already know the vendor is incorporated
    3. If vendor is non-profit
  3. Scenarios where vendor does need to fill out a W9:
    1. Honorariums ARE taxable
  4. Any refunds or failed payments from Vendors should be added to the vendor’s notes in QBO with a note like the following: 2/27/23 Failed payment of $xx.xx, do not include in 1099. JD (date of refund or failed payment)
  5. If a vendor needs to be paid > $600 and you know that we will need a W9 for this vendor, feel free to request a W9 from the client at the time the payment is being made. Sometimes vendors are most incentivized to return a W9 when they are awaiting payment. Be sure to follow Step 2 once the W9 is received.

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