Note: As a Collective LLC tier member, your business files as a single-member LLC using Form 1040 with Schedule C. The information in this article is specifically tailored to this tax classification.
Form W-9 is the standard IRS document you provide to your clients to verify your Tax ID number (TIN). Clients need this form to file information returns, like Form 1099, reporting the money they've paid you.
When you download your Form W-9 from your Collective dashboard, you will notice that it uses your personal name on Line 1 and your Social Security Number (SSN) in the Tax ID box. Since Collective also helped you obtain an Employer Identification Number (EIN) for your LLC, it is natural to wonder why that number isn't used here.
This is intentional. We generated your W-9 this way to keep you compliant with IRS matching rules and to help you avoid potential issues like backup withholding.
The "Disregarded Entity" Rule Explained
This approach is anchored in the "Disregarded Entity" rule.
- What it means: For income tax purposes, your Single-Member LLC is treated as a Sole Proprietorship. The IRS "disregards" the LLC as a separate entity for tax filing.
- The Filing Reality: While your LLC is a separate legal entity for liability protection, the LLC doesn't file a tax return—you do on your personal Form 1040 with Schedule C.
- The W-9 Requirement: Because the IRS matches Form W-9s to the actual tax return filed, the form must list:
- The Taxpayer (You): Your personal name on Line 1.
- The Business (Your LLC): Your LLC’s name on Line 2.
- The Tax ID: Your SSN (which matches your personal tax return).
If we were to use your LLC name and EIN on Line 1, the IRS computer system would likely flag a mismatch between the name (LLC) and the tax return (You). This can trigger a "Backup Withholding Notice," legally forcing your clients to withhold a percentage of your pay. We set up your W-9 this way to prevent that headache.
Why Collective Helped You Get an EIN
You still need the EIN we helped you obtain for the operational and legal side of your business:
- Banking: You cannot open a business bank account without an EIN.
- Hiring: If you hire employees, you must use the LLC's EIN for payroll and employment taxes.
- Local Compliance: Business licenses and sales tax permits often require the EIN.
- Future Growth: The IRS requires the LLC to have its own EIN to make the S Corp election. Having it now means you are prepared for that next step, should you choose to pursue it.
Think of it this way: Use the EIN to talk to your bank and prepare for growth. Use your SSN on the W-9 to talk to the IRS right now.
How to Handle Vendor Payments with Your W-9
There is one small friction point with this setup: Getting checks deposited into your business account.
Because your W-9 lists your personal name on Line 1, some accounts payable departments might strictly follow the form and make the check out to You (Line 1) instead of your Business (Line 2). If you try to deposit a personal check into your business bank account, your bank might reject it if the names don't match.
Here are three direct and practical tips to smooth this out:
Use the "Line 2" Request
When you send this W-9 to a client, include a quick sentence in the email: "Attached is my W-9. My tax reporting name is on Line 1, but please make checks payable to the business name on Line 2." In most cases, their accounting system can easily set the "Print on Check" name differently from the "1099 Name."
Use the Endorsement Trick
If a client forgets and writes the check to you personally, you can usually still deposit it into your business account using a third-party endorsement. On the back of the check: Sign your personal name, write "Pay to the order of [Your LLC Name]", and then sign again (or stamp) as the LLC.
Set up a DBA with Your Bank (Recommended)
Ask your business banker to add your personal name as an authorized DBA (Doing Business As) on your business account. This tells the bank's system that "Your Name" and "Your LLC Name" are the same entity, ensuring checks made out to either one will clear without issues.
A Note on Future S Corp Status
If you are currently in the process of electing S Corp status with us: Once the IRS approves your S Corp election, the rules change! We will then update your W-9 to use your LLC Name on Line 1 and your LLC EIN. But until that election is official, stick with the document currently in your dashboard.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.