Introduction
As you begin the onboarding process, one of the first decisions you’ll encounter is choosing your account type: Individual or Business. This guide is designed to help you understand the differences between these two options and assist you in making the best choice for your situation.
Selecting the correct account type is crucial because it affects how you provide your tax information, how you receive payments, and how Velocity Global Contractor Management reports your income to tax authorities. Whether you’re a freelancer operating under your own name or a legally registered business entity, this guide will clarify the distinctions to ensure a smooth onboarding experience.
Understanding Account Types
Individual Account
An Individual account is suitable for contractors who operate under their own name and do not have a formally registered business entity. This includes freelancers, sole proprietors, and anyone who does not have a separate business tax identification number.
Typical Scenarios:
You offer services directly under your personal name.
You have not registered your business with any government agency.
You do not have an Employer Identification Number (EIN) or a business number.
You use your personal Social Security Number (SSN) or equivalent for tax purposes.
Business Account
A Business account is intended for contractors operating through a legally registered business entity. If you have formed a company—such as an LLC, corporation, or partnership—and have obtained a separate business tax identification number, you should select a Business account.
Typical Scenarios:
You have registered your business as an LLC, corporation, partnership, or other formal structure.
You have an Employer Identification Number (EIN), Canadian Business Number (BN), or other business tax ID.
Your business operates under a legal business name, separate from your personal name.
You file taxes separately for your business entity.
Common Questions and Concerns
Common Questions and Concerns
I don’t have a registered business; can I still use VGCM?
Yes, absolutely! If you do not have a registered business, you should select “Individual” during the onboarding process. VGCM is designed to support individual contractors, freelancers, and sole proprietors who operate under their own name.
What if I sometimes use a business name but haven’t formally registered it?
If you use a business name (sometimes referred to as a “Doing Business As” or DBA name) but haven’t formally registered your business or obtained a separate business tax ID, you should select “Individual.” You can still mention your business name in your profile or communications, but for tax purposes, you are considered an individual.
Will selecting ‘Individual’ affect how I receive payments or file taxes?
Selecting “Individual” means that payments will be reported under your personal tax identification number (e.g., your SSN in the U.S.). You’ll receive tax forms accordingly (such as a Form 1099-NEC in the U.S. if applicable). This is standard for sole proprietors and freelancers.
Do I need a Social Security Number or equivalent to sign up?
Yes, as an individual contractor, you will need to provide your personal tax identification number. In the U.S., this is typically your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). For international contractors, you will need to provide the equivalent tax ID used in your country for tax reporting purposes.
What types of business entities are accepted by Wingspan?
We accept a variety of legally registered business entities, including LLCs, corporations (C-Corp and S-Corp), partnerships, and other formal business structures. As long as your business is registered and has a separate business tax identification number, you can select “Business” during onboarding.
I have a single-member LLC; should I select ‘Individual’ or ‘Business’?
If your single-member LLC has a separate Employer Identification Number (EIN) and you file taxes for it separately, you should select “Business.” However, if you do not have an EIN and the LLC is disregarded for tax purposes (i.e., you file taxes under your personal SSN), you may choose “Individual.” It’s important to consider how your LLC is recognized for tax purposes.
What if my business is registered in a different country?
If your business is legally registered in a country outside of the United States, you can still select “Business.” You’ll need to provide your international business tax identification number during onboarding. Wingspan supports international contractors and will guide you through providing the necessary information.
Do I need to provide my business tax ID during onboarding?
Yes, when selecting “Business,” you are required to provide your business tax identification number, such as an EIN in the U.S., a Canadian Business Number (BN), or the equivalent in your country. This is essential for tax reporting and compliance purposes.
Will my business information be shared with clients or tax authorities?
We securely handle your business information in accordance with our Privacy Policy. Your tax information is used to comply with tax reporting obligations and may be shared with relevant tax authorities as required by law. Clients may have access to necessary information for compliance purposes, but Wingspan takes data protection seriously to ensure your information is secure.
Can I Change My Account Type After Onboarding?
While it is possible to change your account type after onboarding, the process can be complicated. It may involve re-submitting documentation, undergoing additional verification, and could result in temporary disruptions to your account and payments. To avoid these issues, it’s best to select the correct account type from the beginning.
What If I’m Still Unsure Which Type to Choose?
If you’re uncertain about which account type applies to your situation, consider consulting a tax professional or legal advisor who can provide guidance based on your specific circumstances.
Does Selecting ‘Business’ Require Additional Verification?
Yes, selecting “Business” typically requires additional information and verification. You’ll need to provide your legal business name, business tax identification number, and possibly details about your business structure. This ensures compliance with tax reporting and regulatory requirements.
How Does This Affect Canadian and International Contractors?
Canadian and international contractors should select the account type that reflects their operating status. If you’re registered as a business in your country and have a business tax identification number (like the Canadian Business Number or equivalent), select “Business.” Otherwise, select “Individual.” Be prepared to provide your local tax identification numbers during onboarding.
What if my business is a non-profit?
When choosing your business type on the digital W-9 form, you might notice there’s no dedicated “non-profit” option. Even though you’re tax-exempt, the IRS classifies non-profits alongside corporations for 1099 reporting. As a result, Wingspan suggests you to pick “C-Corp” to complete verification, and this doesn’t affect your non-profit status.
Why “C-Corp” Works
IRS Approach: The IRS generally treats non-profit entities as corporations when issuing 1099 forms.
Wingspan Compatibility: Selecting “C-Corp” allows Wingspan to process your information correctly while you maintain your tax exemption.