Bookkeeping · Daily Workflows · Brief · Working level
Vendor records and W-9 collection: before the first payment, not in January
Collect Form W-9 from every new vendor before money moves, build a one-page vendor file, and January's 1099 season becomes a report you run instead of a hunt you dread.
The Form W-9 is the one-page document that makes January possible: the vendor's legal name, entity type, address, and taxpayer identification number, signed under penalty of perjury. Collect it before the first payment — while your leverage is an unpaid invoice — and 1099 season becomes a software report. Chase it in January and you are cold-calling a landscaper who changed phone numbers, facing backup-withholding exposure and filing deadlines at once. The form and instructions live at the IRS's About Form W-9 page.
Why the timing is the whole game
Three forces all point the same direction. First, leverage: a vendor awaiting payment returns the form same-day; a vendor paid in full last spring has no reason to answer. Second, backup withholding: if you cannot obtain a TIN, the rules require withholding 24% from reportable payments — a conversation infinitely easier before the relationship starts. Third, the calendar: 1099-NEC forms are due to recipients and the IRS by January 31, the least forgiving deadline in the filing year, per the Form 1099-NEC instructions.
The thresholds, dated: payments through calendar 2025 were reportable at $600 per vendor per year; the OBBBA raised the threshold to $2,000 beginning with payments in calendar 2026, indexed thereafter. Do not let the higher threshold relax the habit — you cannot know in March which vendor crosses $2,000 by December, and the W-9 costs nothing to collect. Rent and certain other payments report on Form 1099-MISC under the same discipline.
The vendor file
One record per vendor, created before payment one, in your software's vendor profile:
Five fields plus two attachments — the entire file.
| Field | Why it's there |
|---|---|
| Legal name and DBA, exactly as on the W-9 | 1099s filed under the wrong name generate IRS mismatch notices |
| TIN and entity type | Determines whether a 1099 is required at all |
| Remittance details, verified by phone at setup | Your defense against payment-diversion fraud |
| 1099-eligible flag set in the software | Makes the January report complete without review |
| Default expense account and terms | Feeds the AP workflow's coding step |
| Attach: signed W-9 (dated) | The substantiation itself |
| Attach: COI, license, or contract where relevant | One folder when a dispute or audit asks |
The natural enforcement point is the accounts payable approval step: a bill from a vendor with no W-9 on file does not enter the payment queue. Software can help — most packages let you flag a vendor as 1099-track and will nag for the missing TIN.
The January that results
- First business day of January: run the 1099 report — vendors flagged eligible, paid above the threshold, with card and third-party-network payments excluded (those are the processor's 1099-K to issue, not yours).
- Spot-check names and TINs against the attached W-9s.
- File and deliver by January 31.
Total time with a maintained vendor file: an hour or two. Total time without one: the rest of the month. The vendor file is also where a fresh W-9 gets requested whenever a vendor's entity changes — the barter brief is a reminder that even non-cash arrangements can be reportable payments needing the same paper.
Frequently asked questions
- When should I collect a W-9 from a vendor?
- Before the first payment — make it a condition of getting paid. A vendor's cooperation peaks while an invoice is pending and can drop to zero by January, when 1099s are due and the vendor may be unreachable, out of business, or uninterested. No W-9, no payment, no exceptions.
- Which vendors need to give me a W-9?
- Any unincorporated U.S. vendor you pay for services — sole proprietors, partnerships, most LLCs — plus attorneys regardless of entity type. Corporations are generally exempt from 1099-NEC reporting, but the W-9 is how you learn the vendor is a corporation, so the practical rule is simplest: every new service vendor completes one.
- What is the 1099 reporting threshold for payments in 2026?
- For payments made through 2025 the threshold was $600 per vendor per year. Beginning with payments in calendar 2026, the OBBBA raised the information-reporting threshold to $2,000, indexed for inflation in later years. Collect W-9s regardless of expected amount — small vendors have a way of crossing thresholds by December.