Do you have a W-9 for every sub you paid this year?

A water damage restoration company in its first year, about a dozen people. While I was redoing their months, I found a list of people paid by check as subcontractors.

First question: is there a W-9 on file for every one of them? The owners were honest. Probably not. The company grew faster than its paperwork.

That shows up in January. Every sub you paid enough to need a 1099 needs one filed by January 31. To file it you need their legal name, address, and tax ID, and all three are on the W-9. Chasing that in January from a sub you stopped using in June is slow, and some of them never answer.

Missing 1099s cost money. The IRS charges a penalty for every form filed late or not at all, and it grows the longer it waits. A sub who never gives you a tax ID can also leave you on the hook to withhold tax from what you pay them, which no small contractor is set up to do.

So the fix is a rule, and it is the rule I use for my own clients’ payables. No W-9, no check. The sub can complain. They still get paid the day the form arrives.

The time to ask is before the first payment. That is the only moment you have all the leverage.

What to do before year end:

1. Run a report of everyone you paid this year who is not on payroll.
2. Next to each name, mark whether you have a W-9 on file.
3. Request what’s missing now, in December, while the sub still wants your next job.
4. Starting January 1, nobody new gets paid without one.

In QuickBooks Online, go to Expenses, then Vendors. Open each sub you paid this year and click Edit. Check that Track payments for 1099 is turned on and the tax ID field is filled in. Every blank one is a W-9 you still need.

If your sub paperwork looks like this, start the 5-minute intake.