When you work as a freelancer you enjoy a certain amount of freedom and independence to work on your own terms, but there are some things that you can’t avoid, such as contractor forms.
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When you are working as a freelancer, there are going to be some important forms that you are likely to encounter on a frequent basis.
Getting it straight with the taxes
If you are working as an independent contractor, one of the most common IRS form that you are going to get familiar with is Form W-9.
This form is primarily used to provide the sort of information that the company you are doing the contracting work for will need for their tax records.
A W-9 form will contain your Taxpayer Identification Number (TIN) and certification details. This TIN may take the form of a Social Security Number or an Employer Identification Number, and the company will need to keep the information you provide in their files for at least four years, in case any queries arise from the IRS at a future point.
Payment procedures and other details
Another form that will prove to be an important aspect of your freelancing career, is Form 1099-MISC.
The 1099 is actually a series of forms that the IRS categorizes as information returns. This information is predominantly focused on money and is aimed at obtaining details from you regarding any non-salary income that you have received.
Considering we are talking about tax rules and documentation, It may not surprise you to discover that there are at least twenty variations of what are referred to as 1099 forms. All of these forms serve a specific purpose in extracting all of the data relating to income, covering a range of scenarios from not just work that you have done but also things like dividends and savings interest.
For example, a 1099-INT form covers details of any savings account that you have and asks for details of any interest that you have accrued over the past 12 months. Other common 1099’s that you will encounter, include the 1099-DIV, which asks about stocks and dividends, and the 1099-R which looks at the state of your retirement plans, such as pensions.
Miscellaneous income
Another form in the 1099 family that you are going to get familiar with as a freelancer, is the 1099-MISC form.
This is the freelancers equivalent of an employed person’s W2, and the 1099-MISC form is designed to cover details of payments that you have received from your various clients.
If you are a self-employed freelancer, you are going to be enjoying an element of independence in not just the work schedule that you follow, but how you receive your income. The 1099-MISC is necessary because you are a self-employed worker who is being paid with income taxes being withheld by the company paying you.
This has to be accounted for of course, which is why the 1099-MISC is a form that you are going to get up close and personal with in your life as a freelancer.
Imogen Hopkins is self-employed and works from the family home as an accountant. She writes about finances and freelancing for a range of blogs around the web.
