Every January, the same email goes out from every accounting firm to every business owner: “We need W-9s for the following vendors before we can file your 1099s.” And every January, the owner forwards it to a contractor who was paid in April, who has moved, changed phone numbers, or simply has no reason to answer, because they already got paid.
We run an accounting firm, and we send that email too. We’d rather not. Here’s how to make sure you never get it.
Nobody gets their first check until their W-9 is in your hands. That’s the whole fix. A contractor who wants to be paid returns a W-9 the same afternoon. A contractor who was paid nine months ago has nothing to gain by returning it. The piece of paper is free in April and expensive in January, and the only difference is when you ask.
Make it part of how you hire anyone who isn’t an employee: plumber, designer, subcontractor, consultant, the person who cleans the office. W-9 first, then the work order, then the first payment.
For payments you make in 2026, the threshold for sending someone a 1099 moved from $600 to $2,000. That’s a real reduction in the number of forms most small businesses file. But it doesn’t change the W-9 rule, because in April you don’t know which contractor will cross $2,000 by December. Collect the W-9 from everyone; sort out who actually needs a form in January.
Two more things owners get wrong:
The rules give you a tool: withhold 24% from their next payment and send it to the IRS. That’s backup withholding, and it’s what you’re required to do when a payee won’t provide a taxpayer ID. In practice, telling a contractor you’ll be withholding 24% produces the W-9 within a day. You almost never have to actually do it.
Your total 1099 spend is one of the more useful numbers in the business, and most owners never look at it. A fractional CFO does, for three reasons:
Our monthly close includes a vendor check: anyone paid this month without a W-9 on file gets chased now, not in January. Payment methods are recorded so card payments fall out of your 1099 totals automatically, and December is when we run the TIN match. Our clients’ Januaries are quiet. If yours isn’t, reach out. We’ll pull your vendor list and tell you exactly where the gaps are.
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