Stay Organized to Manage Vendors' TINsApril 12, 2012 — 1,255 views
Since 2012, the Internal Revenue Service (IRS) requires businesses to report transactions worth $600 or more on Form 1099, but you can avoid the challenges this change may present by taking a proactive approach. Gathering Vendor Tax Identification Numbers (vendor TINs) early can help you avoid problems and complete your 2013 taxes without delay.
A vendor TIN allows the IRS to identify a supplier. The agency issues a TIN to companies to administer tax laws effectively, including those relating to Form 1099.
The IRS will issue Form 1099 to a company if that business hired a vendor to provide specific services. For example, an online marketing firm may hire an independent consultant to complete analysis of its practices at a contract rate of $1,000 for the project. In this scenario, the consultant would receive Form 1099 from the online marketing business, as it was hired to complete a temporary project outside the firm's everyday operations.
A large corporation may hire thousands of vendors, so managing vendors' TINs is important to avoid tax fines and penalties. You can control this information by contacting vendors directly to receive this information throughout the year.
Creating a Microsoft Excel spreadsheet can be helpful to manage this information. Anytime a company hires a new vendor, be sure to contact them directly by email or phone to get their TIN. Doing so will help you stay organized over the course of 2012, saving you time when completing your taxes the following year.