In plain English
Collect it before the first payment and store it securely. It supports your 1099 filing.
Check that the name matches the tax ID.
Why it matters
A W-9 gives you the name and taxpayer ID you need to prepare information returns for contractors. Chasing that information in January, after the work and payments are done, is much harder than collecting it before the first check. Some contractors stop responding once they have been paid.
A mismatched name and ID can also cause problems after you file, so it helps to check the form when you receive it.
Worked example
Before paying a designer $750, you get a W-9 and record her details.
How to handle it
- Request a completed W-9 before paying any new contractor or vendor who may need a 1099.
- Enter the legal name, business name, address and tax classification into the vendor record in your software.
- Mark the vendor as eligible for 1099 reporting if your software supports that setting.
- Store the signed form securely, limiting access because it contains a taxpayer ID.
- Request an updated form when a vendor changes its name, structure or address.
Common mistakes
- Paying a contractor before receiving the W-9, which leaves you without the information needed at year end.
- Emailing completed W-9s around unencrypted or saving them in shared folders, which exposes taxpayer IDs.
- Entering the business trade name instead of the legal name matched to the tax ID, which can cause a mismatch.
Not the same as: Form 1099-NEC
The W-9 is the form you collect from a contractor to get their details. The 1099-NEC is the form you file and send later to report what you paid them. See Form 1099-NEC.
Go deeper
- W-9 Forms: Collecting and Storing Contractor Information: When to request a W-9, how to check it for completeness, how to store it safely, and what to do if a contractor will not provide one.
- 1099 contractors: a checklist for New Jersey businesses: A practical checklist for paying independent contractors: W-9 collection, 1099-NEC filing, worker classification and what to track during the year.
Related terms
- General ledger: The complete record of every account and transaction in a business's books.
- Gross margin: Gross profit as a percentage of revenue.
- Form 1099-NEC: An IRS information return reporting payments to non-employee contractors above a threshold.
Common questions
What is Form W-9?
The form a contractor gives you with their name, tax classification and taxpayer ID before you pay them.
Can you give an example of Form W-9?
Before paying a designer $750, you get a W-9 and record her details.
Do I need a W-9 from a corporation?
It is still a good practice, because the form shows the vendor's tax classification and helps you decide whether a 1099 is needed. Check the current IRS instructions for which payees are reportable.
Do I send the W-9 to the IRS?
No. You keep it in your records. It supports the information returns you file.
General information, not tax, legal or accounting advice. Confirm rules with the IRS, the NJ Division of Taxation or a licensed professional.