Disclaimer: The following information is not legal or tax advice. Consult with your tax advisor for personalized guidance.
While we cannot provide you with tax advice, we have put together this article to help you through the process of filling in a W-9 form. This has the caveat that you should always seek advice from a professional accountant/tax advisor because we are not authorised to advise about your specific tax situation, including filling out your specific tax form.
US merchants and affiliates are required to complete a standard IRS form called the Form W-9 which includes some basic information about you, including a Tax Identification Number (TIN). The TIN can either be your Social Security Number (SSN) or the Employer Identification Number (EIN) of your business.
Each store in Lemon Squeezy has one owner, and it is their details which should be in the Form W-9. That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit a Form W-9.
Backup withholding tax
If you do not provide your tax information, we are required by the IRS to apply backup withholding tax of 24% on all your earnings.
Any tax withheld by Lemon Squeezy will be remitted to the IRS, and not held by Lemon Squeezy. We will also be preparing and filing Forms 1099 with the IRS that will show the amount of your gross earnings and taxes we paid from your earnings. You will be provided a copy of your Form 1099 no later than 31st January in the year following the year you made your earnings. These forms can be provided to your tax accountant to assist with claiming any tax credits that may be available.
How to complete a W-9 form
The form asks you for your personal details. Please provide details including your name, country, and postal address. Please ensure that you provide a complete address because this address may be used to send you a hard copy of your Form 1099, which is your US earnings summary for the year.
You will also need to select the tax classification that applies to you.
The tax classification on the W-9 form refers to the type of legal entity you choose to run your business. The most common forms of businesses are:
- Sole proprietorships
- Limited Liability Companies (LLC)
A Taxpayer Identification Number is an identification number issued by the United States’ Internal Revenue Service (IRS) or the Social Security Administration (SSA). A Social Security Number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.
|Tax ID Type
|Sole proprietorship is an unincorporated business owned entirely by the individual. In general, the owner is also personally liable for all financial obligations and debts of the business.
|A sole proprietor must use its SSN on the Form W-9 as its TIN.
|A partnership is the relationship existing between 2 or more persons who join to carry on a trade or business. Each partner is taxed on his share of the partnership net profit or loss.
|Partnerships must use its EIN on the Form W-9 as its TIN.
|Corporations are formed under the laws of each state and are taxed corporate income tax separately to the owners. Any earnings distributed to shareholders in the form of dividends are taxed at individual tax rates on the owners’ personal tax returns. Regular corporations are called C Corporations because Subchapter C of Chapter 1 of the Internal Revenue Code is where you find the general tax rules affecting corporations and their shareholders. The Subchapter S Corporation is a variation of the standard corporation. An S Corporation is similar to a partnership in that generally taxes are not paid at corporate level. It has the same corporate structure as a standard corporation, except it files an election Form 2553, Election by a Small Business Corporation, to be treated differently for federal tax purposes.
|Corporations must use its EIN on the Form W-9 as its TIN.
|Limited Liability Company
|An LLC is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, a partnership or a disregarded entity. An LLC that has at least 2 members is classified as a partnership unless it files Form 8832 and affirmatively elects to be treated as a corporation. An LLC that is classified as a partnership must use the LLC’s EIN on the Form W-9 as its TIN. An LLC that has only 1 member is classified as a disregarded entity unless it files Form 8832 and affirmatively elects to be treated as a corporation. An individual owner of a single-member LLC that operates a trade or business is subject to tax in the same manner as a sole proprietorship
|A single-member LLC classified as a disregarded entity generally must use the owner’s SSN or EIN on the Form W-9 as its TIN, not the LLC’s EIN. LLCs that files Form 8832 to affirmatively elect to be treated as corporations should use the LLC’s EIN on the Form W-9 as its TIN.
You’re also asked to fill out your tax ID type (SSN or EIN) and tax ID number. Please make sure you provide the correct SSN or EIN number as the IRS may impose penalties for incorrect SSN or EIN.
How to submit a W-9 form
Once you have verified that all the information you have provided is correct, you can submit your information by clicking the “Submit tax details” button at the bottom of the form. You will be shown a modal with a summary of the information you have provided. Please review this information carefully to ensure that it is correct. At this stage you will also have the option to fill in any further optional fields in the form.
Please make sure you understand all the items under the "Certification" section. The purpose of the W-9 form is to establish your identity and status as a U.S. person. It is important to note that providing false information is subject to penalties under perjury.
After providing your name as an electronic signature, you can click "Continue" in the top right of the modal. You will be prompted to click "I Agree" to be legally bound by the document. The W-9 form has now been successfully submitted.
If you have any questions about this process, don’t hesitate to contact us.