All Forum Posts by: Michael Bernhard

So, let me summarize for anyone viewing this later (some of this is from the above notes and some of this is from discussions with my tax advisor):  

(1) It is best to get a contract when using a service provider; worst case, get a quote that include TAX ID, business name and business address 

(2) Always get a W9 when using a service provider; my advisor told me that you can probably get away without obtaining a W9 from a national provider like Home Depot, Sears Home, etc, but technically the IRS expects you to get the W9; the burden of proof lies with you to prove you did not need to send a 1099, so in the case of Home Depot, etc, it is highly unlikely the IRS would fine you for not sending a 1099.

(3) Using the TAX ID and business name provided on the W9 or quote, perform "TIN Verification" to verify that the business name matches the Tax ID; this can be done for $1 using a web site called www.1099online.com - or use any service you like to do this

(4) There is no need to issue a 1099 to a corporation or LLC; You are allowed to send 1099s to corps and LLCs, but those organizations are allowed to toss them out

(5) Whenever more than $600 is paid to a sole proprietor (i.e. a company that is not a corp or LLC) then the IRS requires that you issue a 1099 to that sole proprietor. You are allowed to send 1099s for less than $600.

Feel free to add your comments if you think something here isn't accurate or quite as black and white as I am thinking.

 Thanks Kurt.  

Thanks Sid.  Makes sense.

Thanks Mary. 

Understood. Thanks guys. Regarding the term  "1099" I meant to say "W9". Anyway it sounds like I dont need to have a contract or a W9 as long as I have a quote with a tax ID. 

Unrelated to this service but just curious, I believe that I would have to issue a 1099 if the provider is a sole proprietor (rather than a corp of LLC). Is that accurate? for example if the busines was "Joe Smith" or "Joe Smith dba HVAC R Us" rather than and corp/llc

First time poster here:

I have operated a consulting business for many years and recognize the need for contracts, 1099s, etc when hiring subs. However I recently becam a landlord and we need an Air Conditioner installed in the unit.  This is a much less formal relationship than I am accustomed to, so I want to get some advice. The contractor provided a written quote and said he will give me an $800 discount for cash payment. He only accepts cash or check. He wants one third down payment with remainder due upon completion. My business partner has used this contractor In the past with no issue. Anyway, all we have is a service quote from this company.  Assuming we use this company, what else should i request (or do) to protect myself?  Is it appropriate to request a 1099?  Or is the Tax ID listed on the quote all I need?  Is a "one third" down payment a reasonable milestone payment?  Is a more formal contract/service agreement necessary?  Or does the quote satisfy the bean counters? I have no real concerns about paying with cash (I know that I must get receipts)---but I want to mitigate risk plus satisfy the IRS (if it ever comes to that). Any assistance is greatly appreciated.