Working with contractors (US): W-9 and 1099 forms

We ask W-9 forms from contractors so we can get their information and we keep that so later, we can give them an IRS 1099 form (IRS stands for Internal Revenue Service). If contractors are paid more than $600, we are obligated to send 1099 form to contractors and to IRS. If less than $600, no need to send 1099 form to contractors and IRS.

Every January, we calculate total amount paid to instructors in the previous calendar year. Contractors do not include corporation or a business.

• Instructors are contractors.

• Some studio owners are contractors, some are not. If a studio Karin of D Dance Studio said she's not a corporation and just a DBA, so we will have to calculate also how much we paid her.

Other studios in Vegas or elsewhere maybe the same case.

Another IRS requirement is W-2, which is the form we need from employees. Movers and Shakers only have a single employee registered (which is Danny himself), as a legal requirement. Everybody else is a contractor.

The contractors will need to get the exact amount they received from us, and also a copy of 1099 forms. If we fail to do this, they will not be able to file their own taxes on time. 1099's for calendar tax year are due January 31st of the following year. Our 1099s are processed by accounting firm HR Block.

Refer to below steps to file 1099s of contractors.

Step 1. Get the partner's W-9 forms

If new instructor/collaborator

If we've only worked with this partner for the calendar tax year, we email them to ask for information. If they're not incorporated, they should be sending us a copy of their updated W-9 form and the amount we sent them exceeds $600 for the calendar tax year, be sure to get their W-9 forms by November.

Here's an example of how to reach out to them:

“Hi {studio owner}!

Wondering if your business entity is incorporated?

If so, could you kindly just provide a document showing this?

If not, we’ll need a W9 to continue {rent} and make payments for the {studio space}.

Just doing some end of the year accounting and making an effort to do things properly.

Thank you!”

If existing instructor/collaborator

W-9 forms do not expire. For instructors/collaborators whom we've been working with, we can submit their W-9 file UNLESS there is a change in the collaborator's W-9 information. This includes changes to the their name, address, taxpayer identification number (TIN), or withholding requirements.

To ensure we're compliant, we should check with the existing partners whether we have their updated W-9 forms or not. This should be done by November of the calendar tax year.

For reference, here are the partners whom we've worked with in 2023 and filed 1099s for.

DanceTopia (inactive)

• John Manego (DJ for Dancetopia)

• Taryn Liberman (event planning manager)

Studios

• Karin Waizman (The Balcony on Beverwil Studio owner)

  
  

• Enrique Lugo (B2B Studio owner)

Note: We're not filing for SOHO Dance LA and The Floor Dance Academy because they are a corporation and therefore not contractors. Technically we should be calculating for VIBE Studio even though they are a corporation because the payments are going to the owner's personal account, but the accountant said we can ignore it.

Instructors

• Inna Ievtieieva (Los Angeles)

• Ariela Conde (Los Angeles)

• Marina Moon (Los Angeles)

• Zweli Barton (Los Angeles)

• Gustavo Pimentel (Vegas)

• Jorge Fernandez (Vegas)

• Mayra Cutiva (Vegas)

Step 2. Calculate the total payments for the year

We typically send payments to partners through Venmo or Zelle (mostly Venmo). To check the amounts we paid the contractor for the calendar tax year, please refer to the instructions below:

For studios: Kindly refer to our payment tracker excel file in Dropbox (tabs to check are "studio rental" and "Venmo") and cross-check with Venmo account history. Take note that on rare occasions, we send payment through Zelle which should be noted in the payment tracker excel file "Venmo" tab.

For instructors:

Kindly refer to their Google payment sheets and cross-check it with Venmo account history and payment tracker excel file in Dropbox (see "Venmo" tab).

Please complete the calculation on or before January 4th.

Step 3. Inform the total payment amount to the partner

After verifying the exact amounts we've paid each contractors, make sure they are informed.

Here's an example of how to inform them:

"Hi {instructor},

We'd like to let you know that we're filing a 1099 tax form for you tomorrow (1/31st). The total payment you received from us in {2023} is {$4,927.00}.

You will be receiving a 1099 with this information. Once we have filed your 1099, may we deliver your copy electronically through email?

Thank you!"

Step 4. Forward all W-9 forms to HR Block, third-party accounting service

After getting all W-9s and also the final payment amounts, the manager will send to HR Block the W-9s, amount and our LLC info. For our 2023 filing, we coordinated with Yvonne of HR Block (yvonne.haskin@tax.hrblock.com, telephone +13104750042).

After submitting the needed information, kindly check our HR Block account. Follow up if nothing was uploaded after 3-4 days. Remember that we should be able to send the contractors their 1099s form before January 31st.

When the 1099 forms are already saved in our HR Block account, the manager will download the files and forward them to student support specialist. The student support specialist will send the 1099s to our contractors.

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