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How to fill out form W9 as a freelancer or content creator

Written by Ricky Nave in Taxes

Filling out IRS form W-9 is a required part of most affiliate program sign up processes and is required by most businesses before they’ll hire you for freelancing or independent contractor work. In this article, I’ll explain what form W-9 is, how to fill it out, and what to do with it afterwards.

What is form W-9?

If you start a new job as an employee, your employer will ask you to complete a form W-4. At the end of the year, you’ll receive a form W-2.

If you start a new role as an independent contractor for a business, the business will ask you to complete a form W-9. At the end of the year, you’ll receive a form 1099.

The purpose of a form W-9 is for a business to collect basic info (e.g. name and tax number) about an independent contractor before they hire them. The business needs this information to be able to give you (and the IRS) a form 1099 for your work at the end of the year. Additionally, form W-9 requires the independent contractor to state (under penalty of perjury) that they are a U.S. person (either a U.S. corporation or a U.S. citizen or legal resident alien). If an independent contractor is NOT a U.S. person, they have to use form W-8 instead of form W-9.

NOTE: Some affiliate programs and other companies hiring you as an independent contractor might not actually use form W-9 but might instead ask for the same information through a form on their website. You’ll enter the information in exactly the same way though.

How do you fill out form W-9?

Whether you are an affiliate marketer, a freelancer, or any other type of independent contractor, the way to fill out form W-9 is the same.

Line 1

If you do your affiliate marketing or freelancing work without a business entity or through a single member LLC owned by you, then enter your (human) name on line 1.

If instead you work through a partnership (including an LLC with at least two members), an S corporation, or a C corporation, then enter the legal business name on line 1. Do not put a DBA name here — only the official name of the company as is shown in the company’s formation documents should be entered.

If you work through a single member LLC wholly owned by a partnership, S corporation, or C corporation, enter the name of that partnership or corporation on line 1 (this is extremely rare for small businesses).

NOTE: Line 1 should NEVER contain the name of a disregarded entity.

Line 2

If you have a disregarded entity name or DBA name which is different from whatever name you entered on line 1, then enter it on line 2. For example, if Jill Brown does freelancing through a single member LLC that she owns named “Brown Contracting LLC”, then she would enter “Jill Brown” on line 1 and “Brown Contracting LLC” on line 2.

If you do not have a disregarded entity name or DBA name different from what you entered on line 1, then just leave line 2 empty.

Line 3

Check exactly ONE box in section 3 (not two and not zero).

If the name you entered on line 1 is a corporation taxed as a C corporation, then check the box for C corporation.

If the name you entered on line 1 is an LLC taxed as a C corporation, then check the box for LLC and enter the letter “C” in the space next to it.

If the name you entered on line 1 is a corporation taxed as an S corporation, then check the box for S corporation.

If the name you entered on line 1 is an LLC taxed as an S corporation, then check the box for LLC and enter the letter “S” in the space next to it.

If the name you entered on line 1 is your own (human) name, then check the box labeled “individual/sole proprietor or single-member LLC”.

If the name you entered on line 1 is an LLC taxed as a partnership, then check the box for LLC and enter the letter “P” in the space next to it.

Line 4

Generally, you’ll leave this section blank. If your business is a C corporation, are doing freelance work that isn’t medical or health related, and only accept wire transfer, then you might be able to get an exemption. If your business is small and you want to minimize hassle though, I’d leave it blank.

Lines 5 & 6

Enter the mailing address you use for your business.

Part I

(I know — it’s not really part I since you already had “parts” before this).

If you entered the name of a human being on line 1, and if that human has a social security number, then enter the social security number where indicated and leave the EIN section blank.

If you entered the name of a human being on line 1 and that human does NOT have a social security number (e.g. because that human is a resident alien), then enter that human’s ITIN in the social security number section.

If you entered the name of a business on line 1, then enter the EIN of that business entity in the EIN section and leave the social security number section blank.

Part II

Read the three statements. Cross out item 2 if it is not true. Then sign and date where indicated. NOTE: DO NOT SIGN or use form W-9 if you are not a U.S. person or business. If you are unsure whether you are a U.S. person or business, ask a tax professional.

What do you do with form W-9 after filling it out?

You do not have to submit form W-9 to the IRS. If a company asks you for a W-9 in order to do independent contractor work, then fill out the form and send it back to them. That’s it.

If you are a U.S. based content creator, freelancer, or contractor and want some help with taxes, book-keeping, or managing money for your business, send me an email through the form below. Unlike many forms on the internet, you’ll get a reply from a real human with deep financial expertise.

References

How partners got mad by speaking different languages

Written by Ricky Nave in Business tactics, strategy, and management

“We do not see things as they are. We see things as we are.”

— The Talmud

In 2013, Daniel Burstein and a team of his coworkers at MECLABS were organizing a conference panel about email marketing.  One of the panelists was Miriam Geller, a Director of Product Management at Yahoo Mail.

While preparing for the panel, the MECLABS team decided to run an A/B test on their email list to understand the impact of one of Yahoo Mail’s newest features:  embedded video.

Daniel assigned the task to a member of his team. She assigned it to her team, and the project was begun.

A few days later, one of the people working on the project came to Daniel with a complaint.  He said the people at Yahoo Mail wanted control of the testing and didn’t trust the MECLABS team, but the MECLABS team needed to run the A/B test in a particular way.  Daniel said he would join the next call with the Yahoo team to help smooth things out.

A few minutes into the call, Daniel realized what was wrong.  The Yahoo team was using the word “testing”, and the MECLABS team was using the word “testing”, but the two teams weren’t talking about the same thing.

The MECLABS team was talking about A/B split testing to determine what impact embedded videos had compared with a control group of people on an email list.  The Yahoo team was talking about quality assurance testing.  The embedded video features was new, after all, and the MECLABS mailing list was big.  The Yahoo team were saying they needed to be in charge of making sure the new video feature was working with enough scale before sending it out to the MECLABS list.  After that semantic difference was sorted out, the project (and both tests) went smoothly.

It’s silly, yet a business collaboration almost fell apart because of the silly misunderstanding.  Understanding the language your partner or customer speaks is critical in business.  Now please enjoy this cinematic recreation of Daniel’s situation:  Youtube

A&W v. McDonald’s — How to save millions of dollars

Written by Ricky Nave in Business tactics, strategy, and management

“We were aggressively marketing a one-third-pound hamburger for the same price… but despite our best efforts, including first-rate TV and radio promotional spots, they just weren’t selling.”

— A. Alfred Taubman (then-owner of A&W)

It was the 1980s, and A&W was trying to compete with McDonald’s Quarter Pounder by selling a ⅓ pound burger for the same price.  But the product wasn’t selling.  Confused, A&W eventually brought in a market research firm to discover the truth:  Customers thought the price of the burger was unfair.

“Why should we pay the same amount for a third of a pound of meat as we do for a quarter-pound of meat?” they asked.

The product was failing because the majority of customers believed that ⅓ pound of meat was less than ¼ pound of meat.  There are three important lessons here.

  1. Most people don’t understand fractions.
  2. Sometimes the marketing messages we send to customers are not as clear as we think they are.  
  3. Before investing millions of dollars in a new marketing campaign, it’s worth doing a small market research study to ensure the campaign will be understood by your target customers.

Google search data implies Americans are scared

Written by Ricky Nave in News

Over the past 7 days, Google search volume for queries containing the word “recession” have more than doubled (see graph below):

Various versions of the query “what is a bear market” surged over 50-fold.  Additionally, variations of many other fear-sentiment queries have increased in volume:

  • “what happens during a recession”
  • “recession vs bear market”
  • “how long will this recession last”
  • “how long do bear markets last”
  • “how to prepare for a recession”
  • “recession-proof businesses”
  • “recession-proof jobs”
  • “will i lose my job in a recession”
  • “what to do with 401k during recession”

These are opportunities for anyone in the recruiting, employment services, or financial services industries (because you have the answers & expertise to help people answer the queries above).

For other consumer-facing businesses, this data is a warning.  The queries indicate a growing fear among Americans that they will lose their job and/or lose their investments.  They also indicate growing financial conservativism with focus on “preparation”.  That means consumer spending will likely continue to decline in inflation-adjusted terms.  That will hurt the top line revenue of many consumer-facing businesses.

If you’re an investor, now is probably not the best time to buy the dip in stocks unless you’re a very good stock picker.

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Six efficiencies of (small) scale companies

Written by Ricky Nave in Business tactics, strategy, and management

Big companies have the money to build big efficient factories, but not every company is a factory.  Sometimes, there is an advantage in being small.  Here are six advantages of (small) scale.

1.  Exemption from providing parental leave

The Family and Medical Leave Act (FMLA) mandates that companies with 50 employees or more provide 12 weeks of unpaid leave annually to mothers with a newborn child or who have just adopted a child.  The law also covers partners of those mothers (e.g. fathers and step-fathers) and has been extended to caregivers of sick family members.

In the case of a natural birth, the company will have months of notice so the interruption can be relatively smooth.  In the case of an adoption, a parent may be on a waitlist for months or years before suddenly having an opportunity with only days of notice.  A family member can become sick even faster.  Those latter scenarios are tough for an employer if the employee is leading a critical project.  That’s a risk large companies are legally obligated to take, but small companies are not.  (I’m not endorsing, just reporting).

Side note:  Technically the law only applies to employees who work at a location where the employer has at least 50 employees within 75 miles.  That means companies with remote workforces can potentially be exempt from the FMLA even with hundreds or thousands of employees.

Side note 2:  Some states such as California, New Jersey, and Rhode Island require that companies provide paid parental leave even if the employer has fewer than 50 employees.  Some other states also impose different rules, so you’d have to check a specific state to see what small businesses located there are allowed to do.

2. Illegal Labor

Many small businesses illegally hire undocumented immigrants.  These businesses can hire workers for half of the legal minimum wage.  Additionally, these businesses don’t pay the overhead taxes, workers’ compensation, etc that are required for legal employees.  This is one of the reasons private equity firms have failed to consolidate industries such as landscaping and pressure washing.  The 15% productivity increase achievable by the PE fund manager can’t overcome the 50% cheaper labor costs of the small business operator using illegal labor.

David & Goliath private equity meme

3.  Workers’ comp insurance exemption

Many states don’t require employers to carry workers’ compensation insurance unless the employer has some minimum number of employees.  For example, a business in Florida generally isn’t required to buy workers’ comp insurance unless the business has at least 4 employees.  Some types of businesses such as agriculture have even higher thresholds (e.g. 6 full time employees or 12 or more seasonal employees).  On the other hand, construction businesses generally have more stringent requirements.

4.  Simpler, cheaper fundraising

If you want to raise money for your company by selling stock, then you’ll have to comply with both state and federal securities laws.  To raise a lot of money on public markets, you have to pay expensive accountants and lawyers to navigate the public offering process.  At minimum that will cost hundreds of thousands of dollars and more likely it will cost millions.  However, if you have a small startup, you can raise money under certain legal exemptions which greatly reduce both the cost and complexity of staying compliant.

5. Fewer tool dependencies

A company with 20,000 employees would take months to transition to a new CRM software.  Everyone in the sales department of the company has existing contacts, notes, expertise, and business processes that depend on the existing tool.  Migrating to a new tool without interruption requires redesigning existing business procedures for how to run sales calls.  On the other hand, a company with only 2 employees can probably migrate to a new CRM software within a day or two.  The small company doesn’t have as complex of processes which means it has less dependency on the tools it uses.  That means if a new, better tool is developed, the small company can change quickly and cheaply while the large company cannot.

6. Less taxes

Many states impose corporate taxes of some form or another (income tax, gross receipts tax, in-state assets tax, etc).  For example, Delaware has a “franchise tax”.  The franchise tax can be computed in one of two different ways, but in the end you are either penalized by the number of shares your company has authorized or the amount of assets your company owns.  Either way, small companies come out ahead in terms of minimizing Delaware franchise taxes.

Side note:  A big company with only a few owners can actually minimize Delaware franchise tax as well by choosing to authorize a maximum of 5000 shares. 

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Map (color-coded) of countries that banned crypto

Written by Ricky Nave in Crypto Law & Regulation

As of June 2022:

  • The EU failed to pass a proposed ban on proof-of-work crypto mining (e.g. Bitcoin mining)
  • Russia decided against banning crypto or crypto mining (possibly motivated by the sanction-bypassing ability of public blockchains while the Ukraine war is ongoing)
  • India decided against banning crypto (deciding instead to impose a hefty tax on both net income and transactions related to crypto)

Neverthless, many countries have imposed bans or significant legal restrictions on crypto ownership, transactions, mining, and/or the ability of crypto companies to interact with banks. Here’s a map showing the current state of which countries have imposed some level of ban or restriction on crypto:

Color-coded map of countries that banned or restricted the use of cryptocurrencies

List of Countries with Bans or Restrictions

  • Algeria
  • Bangladesh
  • Bolivia
  • Burundi
  • China
  • Ecuador
  • Indonesia (religious law, but criminally enforced in some areas)
  • Iraq
  • Kyrgyzstan
  • Morocco
  • Namibia
  • Nepal
  • Tunisia
  • Turkey
  • Uzbekistan
  • Vietnam
  • Benin
  • Bosnia and Herzegovina
  • Burkina Faso
  • Cameroon
  • Chad
  • Congo
  • Côte d’Ivoire
  • Egypt
  • Equatorial Guinea
  • Gabon
  • Guinea-Bissau
  • Iran
  • Jordan
  • Kazakhstan
  • Kuwait
  • Lebanon
  • Libya
  • Mali
  • Niger
  • Nigeria
  • Saudi Arabia
  • Senegal
  • Tanzania
  • Togo
  • Qatar
  • Zimbabwe
  • Central African Republic
  • Turkmenistan
  • Tajikistan

References

Crypto laws & regulations have been changing at lightning speed across the globe during the past two years, which means each of the references below is no longer accurate. However, they provide a useful starting point and link to other resources that you can use to do your own research if you need to find the current legal situation in a particular country.

[1] https://tile.loc.gov/storage-services/service/ll/llglrd/2021687419/2021687419.pdf

[2] https://proeliumlaw.com/cryptocurrency-regulation-tracker/