When your business hires a new vendor or independent contractor, it’s best practice to collect a W-9 from them. A W-9 will gather the necessary information you need about your vendor and will let you know if you need to send them a 1099-NEC at the end of the year.
Is there any time I don’t need to request a W-9 from a vendor?
If you know without a doubt that you won’t need to issue the vendor a 1099 at year end, you can skip it, but it’s hard to know that without having the W-9. You could take the vendor’s word for it, but it’s better to have the proof of the info they gave you in the form of the W-9. It’s always a good habit to always ask for the form, because it will give you the information you need to determine whether you (or your bookkeeper:) will send the year end 1099. Better to have it and not need it, right?
Examples of vendors that won’t need a 1099 include C-Corps, S-Corps, tax exempt organizations, banks, and publicly traded companies (think AT&T for your internet bill).
How do I collect W-9s from vendors?
Send them an email before you pay them explaining to them that you need the W-9 filled out before you send payment. To make it even easier, include a blank copy of a W-9 in the email (you can find this on the IRS website). You can even use a service like Track1099.com to securely request W-9s from vendors, which we recommend doing.
How do I keep track of W-9s?
We recommend filing in your digital file cabinet such as Google Drive. Create folder titled “W-9s” and save each form with the vendor’s name.
Does the thought of collecting W-9s and filing 1099s make your head spin?
You might need a bookkeeper.
Schedule a call with us to learn more about how we can help you!
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
