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LEGAL

DRAFT, subject to attorney review before live use. This document is a plain-language note prepared by in-house counsel for internal use and to share with artists. It is not tax advice. Artists should check their own situation with a tax advisor, and Orcha should confirm this handling with its accountant before first payout.

Tax Note: W-9 and 1099 for Collective Artists

This explains how we handle taxes when we pay a collective artist. It is written so both our team and an artist can read it and understand it.

The Core Idea

A collective artist is a rights holder licensing music to us, not an employee and not a hired contractor doing work for us. So we pay them as a licensor: license and royalty income, reported on a Form 1099, never on a W-2.

  • No wages. No withholding. No payroll taxes on our side.
  • The artist owns their own tax on what we pay them.
  • This keeps the relationship clean and avoids worker-misclassification risk, because we are not directing anyone's work; we are licensing a finished asset they already own.

What We Need Before We Pay (W-9)

Before any payout to a US artist, we must have a completed Form W-9 on file. It gives us the artist's legal name and taxpayer identification number (TIN), which we need to report the 1099 correctly.

  • No W-9, no payout. Stripe Connect onboarding and the W-9 both have to be done before the first transfer runs.
  • We store the W-9 securely and treat the taxpayer information as sensitive personal data (see the Privacy Policy).

The Disregarded-Entity / SSN Rule

This trips people up, so it is spelled out.

  • If the artist is an individual (no company), the W-9 carries their name and Social Security Number (SSN).
  • If the artist is a single-member LLC that is a disregarded entity for tax purposes (the default for a single-member LLC that has not elected to be taxed as a corporation), the W-9 should carry the individual owner's name and SSN (or the owner's TIN), not the LLC's EIN. The IRS matches the 1099 to the individual behind a disregarded entity, so using the LLC's EIN causes a mismatch.
  • If the artist is a corporation, a partnership, or an LLC taxed as one, use the entity name and EIN. (Payments to a corporation are often not 1099-reportable, but we collect the W-9 and let our accountant apply the rule.)

When in doubt, the artist checks with their tax advisor, and we follow what the W-9 tells us.

Which 1099 We File

  • Royalty income (the ongoing share of licensing and D2C revenue) is generally reported on Form 1099-MISC, box 2 (royalties), when it reaches the reporting threshold for the year.
  • Some payments may fall under Form 1099-NEC instead, depending on how our accountant characterizes them.
  • We confirm the exact box and form with our accountant each tax year. The point for the artist is simple: they get a 1099, not a W-2, and the income is theirs to report.

Thresholds and Timing

  • We file the 1099 for a year in which we paid an artist at or above the IRS reporting threshold for that form.
  • We send the artist their copy and file with the IRS by the deadlines the IRS sets each year.
  • We keep tax and transaction records for the periods tax law requires.

For the Artist, in One Line

You keep your masters, we license your music, we pay you your share through Stripe, and at tax time you get a 1099 for that income. Give us a correct W-9 first, use your SSN if you are an individual or a disregarded single-member LLC, and talk to your own tax advisor about how to report it.

Contact

Payout or tax-form questions: licensing@orchacollective.io.