Often, businesses are onboarding vendors to accommodate the pressing operational requirements of the business entity. Be it design, construction work, or web development. If you are hiring a freelancer or a vendor to get the job done for a certain payment, you’re working with an independent contractor.
No matter the term you give to the second party, a freelancer or 1099 vendor or independent contractor, all mean the same in terms of tax law. And what you pay these non-employee workers is termed as “non-employee compensations”, which must be reported in the 1099-NEC forms.
This is why businesses are paying attention to the intricate details of onboarding an independent contractor or a vendor. Entities in 2021 are obtaining the TIN and name information from the vendor prior to onboarding to ensure vendor compliance.
Compliancely’s Real-time TIN matching solutions are enabling businesses like yours to conduct real-time TIN match checks and power your 1099 vendor onboarding processes.
Let’s learn about this in detail.
Compliancely’s real-time TIN Matching is the mega identity verification tool that you’ve got to have in your internal KYC compliance protocols to ensure that your vendors are in good standing with the IRS.
The tax details obtained from the vendor through the W-9 Form are used to search the IRS database in real-time to check if the provided details match the official records, allowing you to check the credibility of your vendors and assess risk.
Retaining quality vendors means more quality work delivered for your business needs (and less risk). How do you qualify the quality of an independent contractor or a vendor? By validating the TIN and name combination against the IRS records.
Further, Compliancely’s bulk TIN match solutions allow you to validate and verify the tax details of all your vendors at once, saving you time and effort.
You can check as many as 100,000+ TINs in less than a minute in real-time. That is significantly higher than what you can scale with IRS TIN Matching.
When you have the TIN/name information saved in your master file, all your vendor compensations are recorded and saved separately by your accounting teams. Your team is responsible for maintaining the transactional records accurately.
This added layer of regular practice enables you to maintain a comprehensive record of all the non-employee compensations, allowing you to report all non-employee compensations to the IRS diligently.
TIN Matching is a lifesaver for your accounting teams because checking the accuracy of the TINs in the midst of timeline-sensitive environments is quite tedious.
Compliancely’s bulk TIN Matching and TIN Lookup API allow your accounting teams to upload the bulk data at once and have Compliancely do the rest.
Our in-built intelligence tools will dynamically search the IRS data lists to match the inputs provided. You can check the auto-generated reports to review how many TINs matched the official records.
The best part?
All of this is done in less than a minute, saving you hours on manual reviews and checks.
When you maintain a comprehensive record of all transactions with your vendors and validate the tax identities of your vendors, you have proof of all your transactions, giving you the tax compliance advantage over your vendors.
Your vendors are required to provide their tax information prior to onboarding, which in itself is a test of credibility. Most tax-evading vendors or freelancers are not interested in disclosing their tax-sensitized information. Check out more red flags on freelancers here
So, with Compliancely’s real-time TIN matching tools, you are enabling your business to maintain a compliant relationship with the vendors, maintaining a comprehensive record of all 1099-NEC reports, improving TIN match accuracy, and preventing your business from being penalized for omitting TIN reports or reporting incorrect TINs.