If you pay freelancers, contractors, or vendors, there's a good chance you need to file 1099 forms, and if you haven't started preparing, you're already behind.

The good news? We can help you get caught up, fast. Not sure where to start? Contact us today, and we'll walk you through exactly what you need to do.

What Is a 1099 Form?

A 1099 form is an IRS tax document used to report payments made to non-employees. The most common type is Form 1099-NEC (Nonemployee Compensation), which reports payments of $600 or more to independent contractors, freelancers, and other service providers during the tax year.

Unlike W-2s for employees, 1099s tell the IRS how much you paid someone who worked for your business, but wasn't on your payroll. If you hired a graphic designer, paid a consultant, or worked with a virtual assistant, you likely need to issue them a 1099.

Why 1099s Matter (And Why You Can't Ignore Them)

Filing 1099s isn't optional; it's an IRS requirement. If you miss the deadline or file incorrectly, you could face penalties starting at $60 per form, with amounts increasing for intentional disregard. Beyond compliance, accurate 1099 reporting protects your business during audits and keeps your financial records clean.

But here's the catch: you can't file a 1099 without first collecting a W-9.

The Missing Piece: Why Form W-9 Is Just as Important

Before you can issue a 1099, you need critical information from your contractors, specifically their legal name, taxpayer identification number (TIN), and business classification. That's where Form W-9 comes in.

Why Every Business Owner Should Collect and Maintain Form W-9

If your business pays independent contractors, freelancers, or vendors, requesting Form W-9 from them isn't just good practice—it's essential protection for your business. Without it, you're exposed to IRS penalties, potential tax liability, and year-end chaos that could have been easily avoided.

1. IRS Compliance

When year-end rolls around, you're legally obligated to file 1099-NEC forms for contractors you've paid $600 or more. But you can't complete those forms without the contractor's taxpayer identification number, and that comes directly from their W-9. Skip this step, and you're stuck filing incomplete or inaccurate returns, which opens the door to IRS penalties that start at $60 per form and climb from there.

2. Protects Against Backup Withholding Liability

Here's a scenario most business owners don't anticipate: without a valid W-9 on file, the IRS can require you to withhold 24% of each payment to a contractor and remit it directly to the government. If you've already paid contractors in full without collecting their W-9s, you could be personally liable for those withheld taxes. What started as their tax obligation can quickly become your financial burden.

3. Helps Verify Business Entities

The type of business entity you're paying matters. Corporations are generally exempt from 1099 reporting (with exceptions for attorneys and certain healthcare providers), but sole proprietors and many LLCs are not. A completed W-9 clarifies whether you're working with an individual, partnership, LLC, or corporation, so you know exactly who needs a 1099. Collect this information upfront, and you'll avoid the double mistake of either filing unnecessary forms or missing required ones.

4. Streamlines Year-End Reporting

Imagine scrambling through emails and texts in mid-January, trying to hunt down vendor details while your deadline looms. Now imagine having every W-9 organized and ready to go from day one. The difference is night and day. When you collect W-9s as part of your standard process, year-end 1099 preparation becomes a straightforward task instead of a last-minute crisis.

5. Establishes Professional Standards

Requesting a W-9 before issuing your first payment does more than check a compliance box; it sets expectations. It shows contractors that you operate a professional, by-the-book business and that you expect the same level of professionalism in return. It's a small gesture that establishes credibility and clarity from the start of every working relationship.

The Takeaway: Make W-9 collection a non-negotiable part of your contractor onboarding. Request the form before the first payment goes out, store it securely (digital files work fine as long as they're protected), and make it standard operating procedure. When you do, you'll stay compliant, avoid unnecessary liability, and turn year-end reporting into a breeze.

Why the Clock Is Ticking

The deadline to file 1099-NEC forms with the IRS is January 31, 2026, and you also need to provide copies to your contractors by that date. That might sound like you have time, but here's the reality:

• If you're missing W-9s, you'll need to track them down (good luck getting responses during the holidays)

• You'll need time to review payments, categorize vendors, and determine who qualifies for a 1099

• Any errors mean refiling and potential penalties

The next few months are critical. Put this off until January, and you'll be scrambling to meet the deadline with missing W-9s and incomplete records.

Feeling overwhelmed? You don't have to figure this out alone. Call us, and we'll help you get organized before the deadline.

What You Should Do Right Now

If you've already been working with contractors, but don't have their W-9s on file, send requests immediately. The sooner you collect them, the smoother your year-end reporting will be.

Need help tracking down missing forms or organizing your 1099 prep? We're here for you. Call us today, and we'll create a game plan that works for your business. No stress, no scrambling, just straightforward guidance to get you compliant before January.

By consistently collecting and maintaining W-9s, you'll keep your business in compliance, protect against unnecessary tax liability, and make year-end reporting a breeze.

The bottom line: Don't wait until January to scramble. Collect your W-9s now, get organized, and make 1099 season stress-free. And if you need a hand? We're just a phone call away.

Call us: (828) 570-5760

Email us: info@denisestubbscpa.com

This blog post is provided for educational purposes only and does not constitute personalized financial, tax, or investment advice. Tax laws are complex, change frequently, and vary based on individual circumstances. Before implementing any strategies discussed, please consult with qualified financial advisors, tax professionals, or CPAs who can assess your specific situation. This content should not be relied upon as a substitute for professional consultation.