Form W-9

What is a W-9 form?

A W-9 form is an IRS document used by businesses to request the tax identification information of individuals or entities they pay outside of payroll— typically independent contractors, freelancers, or vendors. It includes details such as the name, business type, address, and Taxpayer Identification Number (TIN) of the payee.

This form matters because it allows businesses to correctly report non-employee payments to the IRS using the 1099-NEC form. Without accurate W-9s on file, companies may face IRS penalties, withholding requirements, or filing errors. While “W-9” is not submitted directly to the IRS, it plays a vital behind-the-scenes role in tax compliance and contractor management.

Why W-9 forms matter to businesses

The W-9 form’s purpose is to help businesses gather the necessary data to report payments made to non-employees. When a business hires a freelancer, consultant, or contractor, it must collect a W-9 before issuing payment. This ensures that the company has the correct taxpayer information to include in its year-end tax filings.

For example, if a design firm hires a freelance illustrator for a $1,500 project, it must collect the illustrator’s W-9 form to prepare and file a 1099-NEC in January. Failing to collect a W-9 can lead to IRS backup withholding obligations, where the business must withhold 24% of the payment and send it to the IRS.

W-9s are also relevant for payments made to certain LLCs, partnerships, or other entities. As a best practice, businesses should collect a completed W-9 during onboarding and retain it for their records in case of an audit or IRS inquiry.

Key considerations for handling W-9 forms

Managing W-9 forms effectively requires attention to detail and good documentation habits. Employers should request a completed W-9 before making the first payment to a contractor or vendor. The form should be checked for completeness and stored securely in digital or physical files.

It's important to remember that the W-9 form is not submitted to the IRS—it's used internally to ensure the correct information is reported on forms like the 1099-NEC. If the information is missing or inaccurate, the business could be subject to fines or required to withhold a portion of future payments.

Key considerations include:

• W-9s collect essential tax information from non-employees.
  
  
• Required before issuing payments to contractors or vendors.
  
  
• Used to prepare IRS Form 1099-NEC at year-end.
  
  
• Inaccurate or missing W-9s can trigger backup withholding or penalties.
  
  
• Forms should be securely stored and regularly reviewed for accuracy.
  
  
• Only used for internal documentation — not filed with the IRS.