The Importance of Ongoing W-9 Collection for Vendors
Written By: Trevor Putnam, CPA
Collecting W-9 forms from vendors on an ongoing basis is a critical accounting and compliance practice. Maintaining accurate and up-to-date vendor tax information throughout the year significantly reduces the administrative burden, compliance risk, and operational strain that often occurs in January when 1099s are due.
Why Ongoing W-9 Collection Matters
Ensures IRS compliance by having required taxpayer identification information on file before payments are issued.
Reduces year-end workload by eliminating the need to chase vendors for missing documentation during 1099 preparation.
Prevents delays and errors in filing 1099 forms, which can result in penalties and corrected filings.
Improves vendor relationships by avoiding last-minute requests and payment holds in January.
Allows accounting teams to focus on accurate reporting and closing activities rather than document collection.
Risks of Waiting Until January
Vendors may be unresponsive or unavailable, causing delays in 1099 preparation.
Incomplete or incorrect tax information increases the risk of IRS penalties.
Staff time is diverted from critical year-end close and reporting responsibilities.
Increased likelihood of filing extensions or corrected 1099s due to missing data.
Best Practice Recommendation
To minimize risk and improve efficiency, W-9 forms should be collected before issuing a vendor’s first payment and reviewed annually for updates. Establishing this practice ensures compliance, streamlines 1099 reporting, and supports smoother year-end operations.
