A nonprofit organization (or non-business entity) doesn’t distribute surplus income to owners or shareholders. The thing is, its revenue is used to achieve its mission. This kind of entities usually has specific tax benefits since governments treat it as supporting or charitable activities which aim to help the community.
Some non-profits may pay to their members. However, many organizations consist of volunteers who don’t get paid for the services they provide. In case your NPO provides services to another corporation or business you may be asked to complete a W-9 Form (Request for Taxpayer Identification Number and Certification). This document is issued to paid employers to record their personal information and taxpayer identification number. The data has to be submitted to the hirer to facilitate 1099 Form reporting at the end of fiscal year. The final destination of the form is the Internal Revenue Service.
The procedure is important to identify the business or individual who were paid.
If your nonprofit organization is asked to fill out the W-9 Form, you have to take it seriously and fulfill the requirements.
The entity asked you to complete the W-9 usually provides you with the blank template. In other cases, you may find it yourself on the IRS’s website. The instructions for W-9 for nonprofits are almost the same as for individuals and other organizations. Pay attention to the guideline below in case you have doubts regarding the way of the proper preparation:
Before certifying the document, check attentively all the provided data and correct errors if found any.
Once you have finished, file the completed W-9 to the entity requested it. You don’t have to send it directly to the IRS as this is your payer’s obligation. The hirer will retain the document till the end of fiscal period to submit it along with other necessary forms to the Internal Revenue Service.
Note that the Form is an important tax document that can’t be ignored or treated negligently.