Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Business Owners: Curious of the cost for not doing backup withholding in your business.

Name: Painting Business Owners: Curious of the cost for not doing backup withholding in your business.
Uploaded: 2023-10-05T14:52:21+00:00
Duration: 43 s
Channel: Daniel Honan
Description: The video segment recounts a real incident where a painting business owner paid a subcontractor without first obtaining a W‑9 form. When the…

5 Oct 2023 · 1 min

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The video segment recounts a real incident where a painting business owner paid a subcontractor without first obtaining a W‑9 form. When the subcontractor failed to provide the required paperwork and later disappeared, the IRS held the business owner liable for the subcontractor’s unpaid taxes, amounting to tens of thousands of dollars. The speakers use this story to highlight how little business owners know about backup withholding obligations and criticize the IRS for not adequately educating them. Their goal is to raise awareness of the importance of proper tax documentation (W‑9s and backup withholding) to avoid severe financial penalties.

Chapters

in the past, a client where they paid a subcontractor that they did not have a W-9 on. And then the IRS came after them for their subcontractor's taxes. And the painting business owner was trying to do the right thing and correct the issue, get the W-9 from the contractor, but the subcontractor just ghosted him. And so now he was on the hook for tens of thousands of dollars to the IRS for this guy that did some work for him.
Yeah, it's really kind of a sad situation. One of the reasons we want to bring attention to this too is because This doesn't seem to be very well known. My personal opinion is I don't think the IRS has done a great job educating business owners of their responsibilities towards backup withholding and W-9s. So we wanted to, to help people understand the importance of it and the dangers of not having the paperwork correct.