Individuals who wish to be hired as independent contractors are required to complete and sign the employer’s W-9 form. Hiring an independent contractor is a great opportunity for sole proprietors, limited liability companies, and other small business organizations to bring on talented labor without the associated risks and commitment of hiring full-time employees. Contractors are not subject to backup withholding thereby making each individual contractor responsible for paying their individual taxes separate from their employer when filing their annual income tax return. The W-9 form indicates to the IRS that the taxpayer is a freelancer or contractor. Unlike freelancers, hired employees have income taxes deducted from each paycheck received from their employer. Information on the W-9 form comes from IRS tax form 1099-Misc which details income paid to an individual in the United States which would otherwise be recorded on the IRS W-2 form used for hired employees.
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