Instructions for the Requester of Form W-9 (9/2007)
The instructions for filling out, and who needs to fill out, the w-9 is on this page. We have the clients have them filled out for their contractors. This ensures that they have the proper insurance certifications, just in case something happens while they are working for you.
If they are registered with their respective states as either a corporation, partnership, or limited liability company, you will not have to issue a 1099 at the end of the year.
On the other hand, if they are a private person, working as a sole-proprietor, you WILL have to issue a 1099 at the end of the year unless you have them on an actual payroll with taxes being withheld.
IF you eventually decide you want to go the payroll route, make sure you have them fill out the W-4, Your state withholding form (can be found on the state's tax website), and the I-9.
I do work with payrolls, taxes, and bookkeeping. If you need any help, send me a pm. Also, be sure and keep ALL business related receipts. As an LLC, the income or loss rolls directly into your personal taxes. You will be paying the self-employment tax on it. Once you get established and your income is substantial and steady, you might want to see someone about incorporating or filling out the appropriate form to be treated as an S-Corp.