Why You Should Always Collect W-9s from Your Vendors — Before You Pay Them
When January rolls around, a lot of business owners scramble to gather tax documents for their contractors—especially if they’ve forgotten one key step: collecting W-9s. If you work with independent contractors or vendors, this simple habit can save you major stress (and potential penalties).
In this quick video, Ashley from A&L Bookkeeping & Accounting explains why collecting W-9s is so important and how it makes tax season a whole lot easier:
Why W-9s Matter
If you pay an independent contractor $600 or more during the year, you may be required to file Form 1099-NEC to report those payments. But to do that accurately, you need to know:
The contractor’s legal name
Their mailing address
Their taxpayer identification number (TIN or SSN)
That’s exactly what a W-9 provides. Without it, you may not be able to complete your 1099s properly—putting you at risk for IRS penalties or delayed filings.
It’s Not Just for Contractors
One common mistake is thinking 1099s only apply to freelance workers or independent contractors. In fact, the IRS requires reporting for many types of service-based vendors, such as:
Landscapers and lawn maintenance companies
Website designers and developers
Lawyers and legal service providers (even if they are incorporated)
Landlords receiving rent payments
Repair and maintenance service providers
Any vendor you pay for services—not just labor—could potentially require a 1099. And without a W-9 on file, you won’t have the correct information when it’s time to file.
Do You Always Need a 1099?
Not every vendor will need a 1099. Generally, you don’t need to issue one if:
The vendor is a corporation (though some exceptions apply, like attorneys)
You paid them through a third-party platform like PayPal or Venmo
You purchased only goods or materials—not services
But here’s the catch: you might not know for sure when you start working with a vendor. And tracking that down at year’s end is time-consuming.
Best Practice: Collect a W-9 Upfront
That’s why we strongly recommend:
👉 Always request a completed W-9 before issuing the first payment to any vendor.
👉 Keep it on file for your records.
This simple step ensures you’re covered—whether or not you end up needing to file a 1099. And it makes your year-end bookkeeping and tax reporting much smoother.
Need Help?
If you’re unsure how to track contractor payments or which vendors need 1099s, our team can help! We provide monthly bookkeeping and 1099 filing services so you can stay organized and stress-free—without the January scramble.
Ready to get started? [Book your free consultation here].