When do I need to request a Form W9 from a vendor?

When hiring independent contractors to provide a service, we recommend that you request a copy of a signed Form W-9 from them before starting work. (It is also advisable that you obtain a copy of the contractor’s Workers' Compensation/General Liability insurance policy.)

Although incorporated entities (i.e., C-corps and S-corps) do not require a 1099 to be issued at year-end, it is still within your right to request a W-9 from those vendors. When in doubt, you may still issue a 1099 if you are unsure of their entity type and eligibility (if they’re exempt, the IRS will ignore the 1099).

Here are two reasons why requesting a W-9 from ALL vendors is a smart decision:

  1. A W-9 confirms accuracy of information provided to you by the vendor.
    • A signed W-9 confirms, under perjury laws, that the signer is providing accurate information regarding their entity type, federal tax classification, and Taxpayer ID Number (TIN). A vendor can say that they are incorporated and do not need to provide a W-9 or receive a 1099 year-end, but that is not always accurate. Missing or inaccurate information on 1099 forms may result in penalties and extra time to rectify the issue with the IRS.
  2. Many people confuse vendors with an “LLC” designation as incorporated and therefore exempt from 1099 reporting, which is not always accurate.
    • The “LLC” tag refers only to a company’s ability to separate personal liability from liability arising as a result of business operations. Partnerships, C- and S-corporations are entity types that may be designated as an LLC in addition to their federal tax classification as a corporation.

Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws, regulations and lending products are changing daily and decisions as to whether or how to use this information and/or what actions to take are solely those of the employer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes.