As year-end quickly approaches, businesses often face an uptick in activity and can become overwhelmed by the number of tasks required before the start of a new year. Obtaining the necessary W-9’s from vendors is one of those tasks that can be commonly overlooked.
IRS Form W-9 serves as a data collection tool to request a taxpayer identification number, as well as the individual or business name and complete address. The information provided on this form is used by a business to determine if an annual information return (Form 1099-NEC and 1099-MISC) is required to be filed with the IRS and issued to the recipient.
As a best practice, businesses should request a completed Form W-9 from all vendors, contractors, and consultants at the onset of doing business and should be part of the onboarding process when setting up a new vendor. The completed W-9 should be obtained before remitting the first vendor payment. It may be more challenging to obtain an initial Form W-9 from vendors later on, particularly if the vendor no longer does business with your company. This will save time and effort come tax season when any required Forms 1099 need to be prepared and filed with the IRS.
As a best practice, W-9’s can be scanned and attached directly within the vendor’s profile in your accounting software. This ensures that you have easy access to all documents and that they are organized in one central location. It is essential to retain all W-9 forms and request a new updated version from your vendors annually.
