W-9 collection process for accounting firms

The W-9 collection process that works for an accounting firm has one rule and three checkpoints. The rule: no W-9, no vendor record, no first payment. The checkpoints: a line in every monthly close for vendors paid this month without a W-9 on file, backup withholding on the next payment to any vendor who won't respond, and a TIN match of the full list in December. Firms that run it that way file 1099s in the first week of January from a report. Firms that don't spend the last two weeks of January chasing people who have already been paid.

We run an accounting firm, and our January used to be the chase. This is the process that replaced it, updated for what changed in the 2026 rules.

The rule: no W-9, no vendor record, no first payment

The W-9 is free to collect at one moment and expensive at every other. At vendor setup, the vendor wants to be paid, so the form comes back the same day. In January, the vendor has been paid for months and has nothing to gain by answering an email from an accounting firm they've never heard of.

So the rule lives at setup. When a client adds a vendor, the W-9 is collected before the first bill is entered or the first check is cut. The vendor record captures the four facts the 1099 needs: legal name as it appears on the tax return, TIN, federal tax classification, and address. From the classification box, the vendor gets a flag: C corporation or S corporation, generally exempt; LLC taxed as a corporation, exempt; single-member LLC, partnership, or individual, reportable; attorneys, always reportable regardless of entity. Medical and health care payments are reportable too, whatever the entity type.

The client's part of the rule is the hardest part, because the owner will hire the new landscaper on a Tuesday and pay him on Wednesday. The way it holds is that the firm controls the vendor record. A vendor with no W-9 can't be set up, and a payment to a name with no vendor record lands in the exception queue at the close. The owner learns quickly that sending the form first is faster than answering the question later.

What changed for 2026 payments

For payments made in 2026, reported on the forms filed in January 2027, the threshold for Forms 1099-NEC and 1099-MISC is $2,000, up from $600, and indexed for inflation after 2026. That's the One Big Beautiful Bill Act change, and for most small businesses it removes a third or more of the forms.

What it does not change: you still collect the W-9 from every vendor who could cross the line, because in March nobody knows which vendor will hit $2,000 by December. The vendor who did a $900 repair in April and a $1,400 one in November is reportable, and the only cheap moment to get the form was April.

The e-file mandate is unchanged. Any filer with ten or more information returns in aggregate, counting W-2s and every 1099 type together, must e-file. For nearly every client with employees, that's all of them.

The forms and the indexed amounts are the IRS's to publish, so confirm the final instructions when they're released rather than relying on a summary, including this one.

The monthly close check: paid this month without a W-9

One line on the close checklist, recorded as a count: vendors paid this month, by a reportable rail, with no W-9 on file. The target is zero.

When it isn't zero, the chase happens now, in the month the vendor was paid, while the relationship is warm and the next payment is leverage. The request goes from the firm on the client's behalf with a link to return the form, and the vendor record gets a "requested" date so the second ask can be timed. Two asks in thirty days, then backup withholding.

The reason the check is monthly rather than annual is visibility. A firm with sixty clients can't see in July that Client 14 has six new vendors with no W-9 unless the W-9 status lives on the vendor record and can be viewed across all sixty clients at once. When it can, the monthly check is one screen and ten minutes. When it can't, the discovery happens in January, by the person preparing the forms, at the worst time.

Payment rails: what the client reports and what the processor reports

Not every payment to a contractor belongs on the client's 1099. Payments by credit card, debit card, or a third-party payment app are reported by the processor on Form 1099-K, and the payer excludes them. Payments by check, ACH, wire, or cash are the payer's to report.

The practical consequence is that the payment method has to be captured on each transaction as it's recorded, not reconstructed in January. A vendor paid $3,000 by card and $1,500 by check in 2026 gets a 1099-NEC for $1,500, which is under the threshold, so no form. A vendor paid the same $4,500 entirely by check gets one. Getting that right in the ledger means the January totals are correct without a spreadsheet, and the client doesn't send forms that double-report what the processor already filed.

Backup withholding as the tool for the vendor who won't respond

When a vendor has been asked twice and hasn't returned the form, the rules require backup withholding at 24 percent on the next payment, remitted to the IRS and reported on the 1099 when it's filed. Most firms treat this as a threat. It works better as a procedure.

The client pays the next invoice at 76 percent with a note that the balance was withheld as required and will be released against a completed W-9. The form arrives within a day almost every time. If it doesn't, the withholding is deposited and the client is compliant either way. The point isn't to punish the vendor; it's that the rule stops the firm from carrying the risk of a missing TIN into January.

December TIN matching and the quiet January

The IRS TIN Matching program is free for anyone who files information returns, and it checks a name-and-TIN pair against IRS records before the form goes out. Run it in December on every reportable vendor. The mismatches (a vendor who gave a DBA instead of the legal name, a transposed digit, an EIN that belongs to a dissolved entity) get fixed in December while there's time to ask.

Then January is a report. The vendor list, filtered to reportable rails, over the threshold, with a matched TIN, produces the forms. The W-2s and 1099-NECs are due to recipients and to the IRS by January 31, 2027 for 2026 payments, and the firm that did the work at setup hits that date in the first week. We wrote the longer version of why this is a September decision in the January 1099 scramble is decided in September.

Where the platform comes in

Woven is our product, and the vendor record is where this process lives. The W-9 is a document attached to the vendor with the legal name, TIN, classification, and 1099 flag alongside it, the monthly close has the "paid without a W-9" check built in, the payment rail is captured on each transaction so card and app payments fall out of the totals automatically, and the firm sees W-9 gaps across every client on one screen instead of file by file. The January forms come from a report of the year's reportable payments by vendor. To see the cross-client W-9 view on live books, book a demo.