If you pay independent contractors, consultants, freelancers, or small businesses, you need to collect a W-9 form before issuing payments because it ensures accurate tax reporting. A W-9 vendor is any U.S.-based individual or entity that provides services to your business and requires a W-9 for IRS reporting purposes. Managing W-9 vendors properly protects your business from penalties and helps you maintain a clean audit trail.

What is a W-9 vendor?

A W-9 vendor is any U.S.-based individual or entity that provides services to your business and requires a W-9 for IRS tax reporting purposes. You’ll typically request a W-9 from contractors, freelancers, and other service providers so you can report payments accurately and avoid issues at tax time.

What is a W-9 form and why do vendors need to complete it?

The IRS defines Form W-9 as the "Request for Taxpayer Identification Number and Certification." Its purpose is to help businesses and individuals comply with U.S. tax law by properly documenting all reportable income.

When you work with contractors, freelancers, or service providers, collecting a W-9 form before making any payments protects your business. Without a valid W-9, you cannot correctly complete a 1099-NEC form. You also risk Internal Revenue Service penalties, incorrect filings, and backup withholding obligations, where you must withhold 24% of payments.

Key information collected on a W-9

The W-9 form collects the vendor information you need for tax reporting and year-end 1099 preparation. These details confirm a vendor’s identity, tax classification, and taxpayer identification number.

• Taxpayer identification number (SSN, EIN, or ITIN): Identifies the vendor for IRS matching. An SSN applies to individuals, an EIN applies to businesses, and an individual taxpayer identification number is used when a vendor does not qualify for an SSN.
• Legal name and business name: Shows the vendor’s legal name and any disregarded entity or business name, which helps prevent mismatches in IRS filings
• Federal tax classification: Indicates whether the vendor is an individual, sole proprietor, LLC, corporation, or partnership and determines how they report income
• Exemptions and certifications: Includes exemption codes and backup withholding certifications. Vendors sign to confirm their information is accurate

These fields give you the information needed to verify the vendor, populate 1099 forms correctly, and maintain complete tax records throughout the year.

Legal requirements for W-9 collection

The IRS requires businesses to collect W-9 forms before making reportable payments to vendors. You should request the form as soon as you engage a contractor or service provider so you can verify their taxpayer information and avoid compliance issues.

Failing to collect a W-9 can trigger backup withholding, where you must withhold 24% of payments and remit the withheld amount to the IRS. The IRS may also apply penalties when you file 1099s without valid information, ranging from $60 to $330 per form for 2025 depending on how late you correct the issue.

To avoid these problems, collect W-9s during vendor onboarding and verify the information early. In 2024, the IRS collected $120.2 billion in penalties, many of which resulted from preventable information-return errors such as missing W-9s, incorrect taxpayer details, or late filings.

When to request a W-9 from vendors

You should request a W-9 form from a vendor as soon as you start working with them so you can verify their taxpayer information before issuing any payments. The IRS requires W-9 collection when total annual payments for services reach $600 or more in 2025. That amount increases to $2,000 for 2026, with inflation adjustments beginning in 2027.

Requesting the form during vendor onboarding is the safest approach. If you wait until year-end, vendors may be hard to reach or may have changed their business structure or address, which makes it more difficult to prepare accurate 1099 forms. IRS rules require 1099 forms to be sent to both the IRS and vendors by January 31 each year.

Types of vendors who must provide W-9s

Most service providers working with your business need to complete a W-9 for tax compliance:

• Independent contractors and freelancers: These workers operate their own businesses while providing services to yours. Examples include graphic designers, writers, web developers, and virtual assistants.
• Service providers: Professional service firms offering specialized expertise must provide W-9s when you pay them for their work. This includes marketing consultants, attorneys, accountants, IT specialists, and business advisors.
• Landlords and property managers: Property owners or management firms must submit a W-9 when you pay rent for office space, warehouse facilities, or equipment
• Other business entities providing services: Partnerships, limited liability companies, and sole proprietorships that provide services require W-9 collection. Examples include maintenance companies, cleaning services, repair contractors, and event vendors.

About 1 in 10 American workers now identify as independent contractors. As contract work grows, collecting and managing W-9 forms has become a standard part of vendor management.

Tracking dozens of vendors manually can create errors. Ramp centralizes vendor profiles, payment records, and W-9 forms in one place, helping you stay organized as you manage multiple contractor relationships.

Vendors exempt from W-9 requirements

Some vendors aren’t required to complete W-9 forms, which means you’ll rely on other documentation to meet IRS rules. Common exemptions include:

• Corporations (with exceptions): Most payments to C corporations and S corporations are exempt from 1099 reporting, although attorney fees and medical or healthcare payments still require reporting
• Foreign vendors (who need W-8 forms instead): Vendors operating outside the United States should complete Form W-8BEN (individuals) or Form W-8BEN-E (businesses) instead of a W-9. These forms confirm foreign status and may reduce or eliminate withholding.
• Vendors paid less than the annual threshold: When total payments stay below the annual reporting threshold, you do not need to collect a W-9 or file a 1099 for that vendor

Document exemptions carefully in case the IRS asks for an explanation later.

Independent contractors vs. vendors

Independent contractors perform specific work under a contract and decide how and when the work gets done. A vendor is a broader category that can include sellers of goods, services, or both. Both may require a W-9 form, but their roles, tax filing obligations, and working relationships with your business differ.

Scenarios requiring W-9 collection

You should request a W-9 whenever you need a vendor’s taxpayer information before issuing payments. In practice, that typically includes situations such as:

• Before paying any independent contractor, consultant, or freelancer for services
• When setting up a new vendor in your accounting or payment system, even if it’s unclear whether payments will exceed the annual threshold
• Before signing a service agreement or contract with a vendor who will receive payments
• When leasing property, office space, or equipment from a landlord or business owner
• If a vendor changes their business structure, such as switching from a sole proprietorship to a limited liability company
• If a vendor provides a new taxpayer identification number because of ownership changes or IRS updates
• When paying professional service firms, such as legal, accounting, or consulting practices that operate as partnerships or single-member LLCs
• If you restart work with a vendor after several years and don’t have updated tax information on file

Even if you pay a vendor less than the annual threshold, collecting a W-9 up front is smart. Vendor payments can accumulate across multiple invoices, and tracking thresholds later adds unnecessary risk. Collecting the form early keeps your vendor records complete.

You’re responsible for tax compliance even if a vendor refuses to provide a W-9. Start backup withholding immediately and withhold 24% of all payments until the vendor submits a proper form or the IRS instructs you otherwise.

How to request and collect W-9 forms from vendors

Finance teams, accountants, and business owners are responsible for collecting and managing W-9 forms. If you handle vendor payments, oversee accounts payable, or manage compliance, W-9 collection is part of your role.

Collecting and organizing W-9s isn’t a once-a-year task. You need a clear system in place when you onboard each new vendor and maintain it throughout the year.

Step 1: Request a W-9 before any payment is made

Request a W-9 form when you first engage a vendor before any work begins or payments are issued. Make W-9 collection a required step in your vendor onboarding checklist. If a vendor refuses, explain that you cannot process payments until you receive it.

Step 2: Use secure methods to collect W-9 forms

Avoid collecting W-9 forms through unsecured email or file-sharing platforms. Instead, use encrypted email, a secure online portal, or a trusted e-signature service.

Ramp’s vendor management system allows you to securely collect W-9 forms and store them alongside vendor profiles. Vendors can upload documents directly through Ramp’s encrypted portal, which keeps taxpayer information protected and easy to access when needed.

Step 3: Review every W-9 form immediately upon receipt

Don’t file the form without checking it. Confirm that the legal name matches the TIN format, such as using a Social Security number for individuals or an employer identification number for businesses.

Verify that the entity type is selected correctly and check for missing signatures, address details, or certification errors. Reviewing the form early gives you time to correct mistakes while the vendor is still engaged.

Step 4: Validate TINs through the IRS system

Use the IRS TIN matching system to confirm that the taxpayer identification number matches the legal name provided. Early validation reduces the risk of receiving IRS “B-Notices” after filing 1099 forms.

Step 5: Store W-9 forms securely and organize by vendor

Store W-9 forms in a secure digital or physical location with restricted access. Assign vendor folders, tag documents clearly, and keep records organized by vendor name or TIN. You should retain these records for at least four years after the tax return year to which they relate.

Step 6: Track cumulative vendor payments during the year

Keep a running total of payments made to each vendor to know when you cross the annual threshold that triggers 1099 reporting. Set alerts in your accounting system to flag vendors approaching the limit.

Step 7: Review and update W-9 forms annually

Request an updated W-9 if a vendor changes their name, business structure, or taxpayer ID. Set an annual reminder to review existing forms and confirm they’re still accurate.

Step 8: Prepare for backup withholding if needed

If a vendor refuses to provide a W-9 or submits incomplete information, you’re required to begin backup withholding. Withhold 24% of each payment and remit the withheld amount to the IRS using Form 945. Document your withholding actions carefully to avoid penalties during audits.

Digital vs. paper W-9 collection

Digital W-9 collection offers speed and convenience. Vendors can complete forms through email or secure online portals, and you can store them in cloud-based systems for easy retrieval. These methods reduce processing time and minimize the risk of lost paperwork.

Paper forms work well for vendors who prefer traditional methods or lack reliable internet access. The trade-offs include manual data entry, physical storage requirements, and a higher chance of misplacing documents. Paper forms also take longer to process and distribute.

Electronic signatures on W-9 forms are acceptable under IRS guidelines. A signature may be typed, drawn, or applied through e-signature tools such as DocuSign or Adobe Sign. For digital collection, use encrypted email or secure portals to protect taxpayer identification numbers. Paper forms should be stored in locked cabinets with limited access.

Common challenges and solutions

Some vendors hesitate to provide W-9 forms because they’re concerned about identity theft or don’t understand why the information is needed. Explain that the form is required for IRS compliance, not for credit checks, and offer to send the official IRS version directly from irs.gov to reassure them.

If a vendor submits an incomplete or incorrect W-9, contact them quickly to request a corrected version. Common issues include missing signatures, blank taxpayer identification fields, or mismatched names and business structures. Set a deadline for receiving the updated form, and consider backup withholding if the vendor repeatedly refuses to cooperate.

International vendors follow a different process. Foreign individuals and businesses should complete Form W-8BEN or W-8BEN-E rather than a W-9. These forms confirm foreign status and help determine whether withholding applies. Keep updated W-8 forms on file because they generally expire every three years.

W-9 forms and 1099 reporting: The connection

The information you collect on W-9 forms flows directly into the 1099 forms you file at year-end. The taxpayer identification number, legal name, and business classification from the W-9 populate the corresponding fields on Form 1099-NEC or 1099-MISC. Accurate W-9 data prevents IRS penalties and helps vendors report their income correctly.

Form 1099-NEC reports nonemployee compensation that meets or exceeds the annual threshold paid to independent contractors and freelancers for services. This form replaced the old Box 7 on Form 1099-MISC and must be filed separately. Form 1099-MISC now reports rents, royalties, prizes, awards, medical payments, and other miscellaneous income categories.

The IRS requires you to mail 1099 forms to recipients by January 31 and file copies with the IRS by the same date for 1099-NEC. Other 1099 forms filed electronically are due March 31, while paper versions must reach the IRS by February 28. Missing these deadlines triggers penalties starting at $60 per form.

Backup withholding requirements

Backup withholding ensures the IRS receives tax on reportable payments when a vendor’s taxpayer information is missing or incorrect. It applies when vendors fail to provide a valid taxpayer identification number or when the IRS notifies you of a mismatch. The rate is 24% of each payment, and you must remit withheld amounts quarterly using Form 945.

Start withholding once you receive IRS Notice CP2100 or CP2100A, or when a vendor refuses to submit a W-9 after multiple written requests. Calculate 24% of the gross payment before issuing it and deposit the funds through the Electronic Federal Tax Payment System.

Notify vendors in writing before withholding begins. Your notice should explain why withholding started and how they can stop it by providing a correct taxpayer identification number or certifying that they are not subject to withholding.

Year-end tax reporting process

Creating accurate 1099 forms requires careful organization and attention to detail throughout the year by following these steps:

1. Gather all W-9 forms collected during the year and verify each vendor received the annual threshold amount or more in reportable payments
2. Review payment records to calculate total amounts paid to each vendor, excluding reimbursed expenses or exempt payment types
3. Transfer the legal name, address, TIN, and tax classification from each W-9 onto the corresponding 1099 form
4. Double-check that TINs match exactly between your records and the W-9 forms to avoid IRS mismatch notices
5. Generate recipient copies and IRS copies, then file electronically through the IRS Information Returns Intake System

Filing deadlines vary by form type. Form 1099-NEC must reach both recipients and the IRS by January 31. Most other 1099 forms go to recipients by January 31, with IRS copies due February 28 for paper filing or March 31 for electronic filing.

Penalties in 2025 for incorrect or late 1099 filing range from $60 to $330 per form, depending on how late you file. Intentional disregard carries a minimum penalty of $660 per form with no maximum cap. The IRS also charges interest on penalty amounts until you pay the balance in full.

Best practices for W-9 vendor management

Build W-9 collection into your vendor onboarding workflow from day one. Make the form a required step before processing any payments and communicate this policy clearly to new vendors. Sending the W-9 request with your vendor agreement or purchase order helps prevent delays.

Set up a centralized system for tracking and organizing W-9 forms, whether digital or physical. Your structure should allow quick retrieval by vendor name, tax ID, or date collected. Include reminders for renewing W-8 forms from international vendors, which generally expire every three years.

Schedule annual audits of your vendor database to catch outdated information. Review payment totals to identify vendors approaching the reporting threshold who have not submitted W-9s. Update forms whenever vendors change their business name, structure, or taxpayer identification number.

Technology solutions for W-9 management

Vendor management platforms such as Ramp automate W-9 collection by sending electronic requests to vendors and tracking completion status. These systems store forms securely, integrate with your accounts payable workflow, and often include TIN matching to verify taxpayer identification numbers before payments are processed.

Specialized W-9 collection tools such as Tax1099.com and Track1099 focus on information return compliance. They send reminders to vendors who have not completed forms, flag missing or incorrect data, and often include 1099 preparation features that pull W-9 data directly into year-end filings.

Most accounting systems—including QuickBooks, Xero, and NetSuite—provide built-in W-9 management features. Integration allows vendor tax information to flow automatically into your 1099 preparation process. Look for software that validates TINs, tracks collection status, and generates compliance reports for audit purposes.

Compliance and recordkeeping

Strong recordkeeping helps you stay compliant with IRS rules and prepares you for audits. The IRS requires businesses to retain W-9 forms for at least four years after the vendor’s last payment or the filing date of the related 1099 form, whichever is later. Retain them longer if your state has extended requirements.

Store W-9s with the same security used for other sensitive tax documents. Digital storage should include encryption, access controls, and regular backups. Paper forms belong in locked cabinets with limited access, and unencrypted W-9 files should never be stored on shared drives or sent through unsecured email.

Prepare for potential audits by organizing W-9s alongside payment records and 1099 copies. Create a master spreadsheet linking each vendor to their W-9 location, total annual payments, and 1099 filing status. Document any exemptions or special circumstances, such as corporate payees or amounts under the reporting threshold.

Common W-9 mistakes to avoid

Even experienced business owners make preventable errors when collecting and managing W-9 forms. These are some of the most common issues and how to avoid them.

Accepting incomplete or unsigned W-9 forms

Incomplete or unsigned W-9s can cause rejected 1099 filings or require you to implement 24% backup withholding. Penalties for incorrect forms range from $60 to $330. Pause vendor payments until you receive a complete, signed W-9. If a freelancer sends an unsigned form, return it with a clear explanation of what’s missing. Use automated checks in your vendor management system to flag incomplete forms early.

Waiting until year-end to collect W-9s

Scrambling to collect W-9s in December or January increases the risk of missing forms. Contractors may have moved, changed information, or stopped responding, which can delay 1099 filing and lead to penalties. Request the W-9 before issuing the first payment to any new vendor. Add this to your vendor setup checklist alongside insurance certificates and contracts.

Using outdated W-9 forms

The IRS updates Form W-9 periodically to reflect tax law changes. Using outdated versions can lead to processing delays or incorrect tax classifications. Download fresh W-9 forms from IRS.gov during vendor onboarding and check the revision date in the upper right corner. Review your templates quarterly to ensure you distribute current forms.

Failing to verify taxpayer identification numbers

Accepting a W-9 without validating the TIN can lead to IRS mismatch notices and penalties. CP2100 notices require you to request a corrected W-9 and may trigger backup withholding. Use the IRS TIN Matching program to verify the vendor’s legal name and TIN before making payments. Many accounting platforms include automatic TIN validation to help catch issues early.

Neglecting to update W-9s when vendor circumstances change

Vendors may change their legal name, switch entity types, or update their EIN. Filing 1099s with outdated details leads to mismatch notices and correction requirements. Send annual requests asking vendors to confirm or update their W-9 information, especially before year-end 1099 preparation. This practice helps catch changes early and avoids filing unnecessary or incorrect 1099-NEC forms.

Use Ramp for smarter vendor management

Building a smarter W-9 process starts with strong habits. Collect forms early, verify vendor information carefully, and track cumulative payments year-round. Keeping your vendor records accurate and complete protects your compliance and keeps your financial operations running smoothly.

Using Ramp strengthens this process even further. Ramp’s vendor management system helps you securely collect W-9 forms during onboarding, centralize vendor records, automate payment tracking, and stay ahead of 1099 deadlines. By embedding W-9 collection into the system, Ramp reduces manual errors, improves audit readiness, and saves your team time.

Try an interactive demo to see Ramp’s vendor management system in action and learn how much time and money it can save you.