The best time to request a W-9 is before you make the first payment. If you can collect it at the point you agree to work together or sign a contract, even better. The goal is to have the vendor’s or contractor’s tax information on file before any money changes hands.

The reason timing matters is that you need the information on a W-9 to file 1099 forms at the end of the year. If you pay a non-employee $600 or more during the calendar year, the IRS expects you to report it. That means you need their legal name, business name, address, taxpayer identification number, and entity type. All of that comes from the W-9. If you don’t have it when payments start flowing, you’re setting yourself up for a scramble later.

Chasing W-9s in January when 1099s are due is one of the most common headaches for small business owners. Contractors move on to other projects, change phone numbers, or just don’t respond quickly. Some never respond at all. If you collected the form upfront, this problem doesn’t exist.

There’s also a compliance reason to collect early. If a vendor or contractor refuses to provide a W-9, the IRS requires you to withhold 24% of their payment as backup withholding. Most business owners don’t know this rule exists, and even fewer enforce it. But if you’re ever audited and you paid someone over $600 without a W-9 on file and without backup withholding, that’s a problem.

Make W-9 collection part of your vendor onboarding process. Before you issue the first check or send the first payment through Zelle, Venmo, or any other method, get the W-9. Treat it like a requirement, not a favor you’re asking. Most experienced contractors and freelancers expect it and will hand it over without hesitation. The ones who push back or delay are often the same ones who will be impossible to reach at tax time.

Keep your W-9s organized in one place. A dedicated folder in your cloud storage works fine. Label each file with the vendor name and the date received so you’re not digging through emails later. When year-end comes around, you’ll have everything you need to file accurately and on time.

One more thing worth noting is that W-9s don’t expire, but information changes. If a contractor changes their business structure, like going from a sole proprietorship to an LLC, their tax information changes too. It’s good practice to request an updated W-9 if you haven’t worked with someone in a while or if they mention a change to their business.

Building this habit into how you manage vendors saves real time and stress. As a QuickBooks ProAdvisor in Long Beach, I see business owners every year who spend hours tracking down tax information that could have been collected in two minutes at the start of the relationship. A little effort upfront prevents a much bigger headache down the road.