Your Accountant Is Going to Ask You for W-9s in January. Here’s How to Never Have That Conversation Again.

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.

The one rule

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.

What changed for this year

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:

• Card and app payments aren’t your problem. If you pay a contractor by credit card, or through a payment app that issues its own reporting, the processor reports it, not you. Checks, ACH, wires, and cash are the payments you report. This is why your bookkeeper asks how you paid someone, not just how much.
• Corporations are generally exempt, but you only know that from the W-9. The form tells you whether the vendor is a corporation, an LLC taxed as one, or an individual. Attorneys get a form regardless. No W-9, no way to know.

If a contractor won’t give you one

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.

What to do this month, not in January

1. Pull your vendor list for the year. Anyone paid by check, ACH, or cash who might cross $2,000: is there a W-9 on file? If not, ask now, while you’re still sending them work.
2. Add the W-9 step to whatever you use to onboard vendors. A folder, a checklist, a field in your accounting system. It doesn’t matter which, as long as no first payment goes out without it.
3. Ask your accountant to run a TIN match in December, so a mistyped ID gets fixed before the form is filed, not after the IRS notice arrives.

What a CFO reads in your 1099 total

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:

• Concentration. If one contractor is 40% of your contractor spend, you have a dependency, and a pricing problem the day they raise their rate. That’s a conversation to have in October, not when they leave.
• Classification. A contractor you paid every two weeks, all year, on a schedule you set, with your tools, may be an employee in the eyes of the state. The 1099 total is where that risk shows up first, and misclassification penalties are expensive. Better to convert them on your terms.
• Labor cost, honestly stated. Contractor spend plus payroll is your real labor cost. Owners who watch only payroll think they’re leaner than they are. The 1099 total corrects the picture, and that corrected number is what drives pricing and hiring decisions.

Where we come in

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.