This is general information to help you ask better questions. It is not legal or tax advice. For your own situation, talk to a licensed professional. We will have one visit the class.
Many people believe they cannot work because they do not have a Social Security Number or a certain visa. For business owners, that is generally not the case.
Employee or owner
- An employee fills out an I-9 form to prove they are authorized to work.
- A business owner or independent contractor does not fill out an I-9. When a customer asks, they give a W-9 instead — and a W-9 can be filled out with an ITIN instead of a Social Security Number.
When you clean a house, fix a sink, or cater a party as your own business, you are an independent contractor. You decide when you work and how. The customer pays you the full amount.
What an ITIN is
An Individual Taxpayer Identification Number. The IRS issues it to people who are not eligible for a Social Security Number so they can pay taxes.
- The IRS wants your taxes regardless of your status. Getting an ITIN does not, by itself, alert immigration authorities. It is a separate system built to collect tax.
- With an ITIN you can file a tax return, open a business bank account at many banks, and build a documented history of paying what you owe. That record can matter later.
Applying takes a form (W-7) and proof of identity. Bring your questions to the ITIN session; the guest that day has done it.
You handle your own taxes
Customers pay you $100 and keep none of it for taxes. That means the tax is yours to pay at the end of the year. Set aside 20 to 25 percent of every payment. Keep it separate. This is why the notebook in Getting paid and keeping track matters.
Two rules
- Never use a fake Social Security Number. It is a crime, and it can permanently close doors that are open to you today. Use your real ITIN.
- Act like a business. Give a receipt every time. Write down every dollar. A person with records is a business owner. A person without them is "working under the table," and that is a very different conversation with everyone from a bank to a lawyer.
What to bring to the ITIN session
Your questions, written down. Whether you already have an ITIN. Whether anyone has ever asked you for a W-9. The guest will not know your situation — you will have to tell them.
This week
- I wrote down my questions for the ITIN session.
- I know whether I have an ITIN, and if not, what the W-7 form is.
- I know what a W-9 is and that I fill it out with my ITIN if a customer asks.
- I am setting aside 20 to 25 percent of every payment for taxes.
- I give a receipt for every job.