When Small Businesses Need Form W2 vs W9 vs 1099

Every small business owner needs to know the difference between Form w2 vs w9 vs 1099. All businesses will use each of these tax forms at some point throughout the year if they hire both employees and independent contractors. However, each form serves a different purpose. As a result, make sure that you know when and for whom to use each form. Having that knowledge will prevent you from unintentionally misclassifying one of your workers and paying a fine.



What is a W2 Form?

Employers provide Form W2 to all full-time employees. You will distribute these forms at the end of the year. Providing the form enables your employees to file their tax returns. The form helps to summarize each employee’s earned wages for that year. The form also indicates how many tax dollars were withheld and sent to the Internal Revenue Service. When selecting Form W2 from w2 vs w9 vs 1099, make sure to remember all W2 forms get sent to the IRS.


When to File Form W9?

Freelancers, or independent contractors, fill out the IRS’ W9 form. Once they fill it out, they will give it to your company ahead of providing their independent services. A company references a W9 form when it needs an independent contractor’s contact information. The form also outlines how the hiring business must report the money they paid workers during that year to the IRS.

Once a company determines the year-end total, it also reports it to the contractor. The company will use a 1099 form to file the year-end reports to both parties. Companies must show at least three attempts to get W9 information from a contractor. The IRS will fine a company starting at $50 if they do not collect necessary W9 forms.


Does My Company Need Form 1099?

Businesses file w2 vs w9 vs 1099 forms for distinct reasons. Companies distribute Form 1099 to certain independent contractors at the end of the year. You will give the Form 1099-NEC to any contractor who you paid $600 or more in the past year. The form summarizes what the company paid the contractor for their services. You must also send the form to the IRS. The IRS uses the form to keep track of how much an independent contractor earned from the hiring company.


Why Use AMS Software

Our tax software allows users to access all 1099, W2, and related forms. The database system generates these forms, and the entry screen appears like an actual form. Whether you use w2 vs w9 vs 1099 forms, you can import data from multiple sources. These sources can include a form print file, ordinary text file, or Excel.



We have also made it so that users can print forms on pre-printed forms. Further, we offer easy form alignment and an option for payer backup and restore. Whichever form you need for the 2022 tax season, you can save time and money by investing in proven reliable tax software.

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.