The best time to collect a W-9 is before you make the first payment to a contractor or vendor, not in January when you’re trying to file 1099s.

Most business owners know the January scramble. You need to file 1099s by the end of the month, and suddenly you’re chasing down vendors who won’t return calls or emails. Some have changed phone numbers. Others simply don’t respond. You’re stuck guessing at legal names or TINs, which creates compliance problems and potential penalties.

The W-9 gives you three pieces of information you need for accurate 1099 reporting. The legal name of the person or business, which might differ from the name they operate under. Their Taxpayer Identification Number, either a Social Security Number or Employer Identification Number. And their entity type. This last part matters because corporations generally don’t require a 1099, so knowing the entity type upfront helps you track who actually needs one at year end.

Make W-9 collection part of your vendor onboarding process. Before you pay a new contractor the first time, request the W-9. No W-9, no payment. Most contractors understand this because they’ve dealt with it before. Frame it as standard business procedure rather than a personal request.

If a vendor refuses to provide a W-9, you’re required to withhold 24% of their payment as backup withholding and remit it to the IRS. This is a real consequence that motivates compliance when you explain it. If your vendor records have gotten messy over time, bookkeeping cleanup and catch-up services can help you get organized and track who has current W-9s on file.

Store W-9s securely since they contain sensitive information like Social Security Numbers. A dedicated folder in your accounting system or secure cloud storage works. Keep them organized by vendor name so you can retrieve them easily when 1099 preparation time arrives.

When vendor information changes, such as a new business structure or address, request an updated W-9. Some businesses do an annual review in October or November to catch any updates before year end.

The deadline for furnishing 1099-NEC forms to recipients is January 31, and filing with the IRS is also January 31. That’s not much time if you’re starting from scratch. But with W-9s collected throughout the year, you’re just reviewing records and generating forms rather than chasing paperwork.