W-9 Form for Businesses: How to Collect It and When

You're about to pay a new contractor for the first time. Before the money moves, one small form decides whether next tax season is calm or chaos: the W-9.

Get it at the start and the year-end 1099 almost writes itself. Skip it, and you're chasing a taxpayer ID in January from someone who has already moved on, with a 24% withholding problem and a penalty clock running.

This is the payer's side of the W-9. Not how to fill one out for yourself, but how to collect, check, and act on the ones you receive.

What a W-9 actually does for you

Form W-9, titled "Request for Taxpayer Identification Number and Certification," does one job: it gives you, the business making the payment, the payee's correct taxpayer identification number (TIN) and their signed certification that it's right. You keep it on file. You use it to file the information return the IRS requires, usually a 1099-NEC for a contractor.

The form flows one way. The requester is the business that has to file the return. The provider is the person or company being paid. You don't send the W-9 to the IRS; you hold it and let it feed the 1099.

One detail saves real time: a W-9 doesn't expire. The IRS attaches neither an expiry nor a renewal period to it. You collect a fresh one only when the payee's details change, say a new name or a new entity. That's the opposite of the W-8BEN you collect from foreign contractors, which runs out.

Keep it on file. Reuse it every year.

When to collect one, and from whom

The rule of thumb is simple. Collect a W-9 from any US person or US entity you'll pay in a way that might need a 1099, and do it before the first payment, not after.

That ordering is the whole game.

"US persons" here means US citizens, US residents, and US businesses: sole proprietors, LLCs, partnerships, corporations. For the 2026 tax year you file a 1099-NEC once you've paid a contractor $2,000 or more for services, a threshold raised from the old $600. You rarely know in advance who will cross it, so the safe habit is to collect a W-9 from every new contractor and vendor at onboarding.

A foreign contractor is a different form. Someone who isn't a US person gives you a W-8, not a W-9, and the analysis shifts to withholding and treaties. We cover that in 1099s for foreign contractors and paying international contractors.

W-9 vs W-8BEN: who hands you which

The single most common onboarding mistake is collecting the wrong form, which leaves you exposed on withholding. The split is about who the payee is, not what they do.

For treaty relief on an individual's personal services, the right form is Form 8233, not the W-8BEN. If you misread a foreign payee as a US one and skip the withholding, the liability lands on you, so when a contractor's status is unclear, resolve it before the first payment rather than after.

Backup withholding: what happens without a valid TIN

Here's the lever the W-9 controls. If a payee doesn't give you a correct TIN, you're required to take 24% backup withholding from their payments and remit it to the IRS on Form 945.

Twenty-four percent off the top, and it's your job to collect it.

That turns a missing form into a live cost. You either withhold 24% of every payment, which few contractors welcome, or you pay in full and carry the risk yourself. Backup withholding can also start if the IRS later notifies you that the taxpayer ID on file is wrong, a so-called B-notice. The clean path is the boring one: a correct, signed W-9 on file before you pay, and a quick check when a payment amount makes a 1099 likely.

Disregarded entities and single-member LLCs

This is the line on the form people get wrong most often, and it changes whose number you report.

A single-member LLC is, by default, "an entity disregarded as separate from its owner" for income tax, a disregarded entity, unless it filed Form 8832 to be taxed as a corporation. So on the W-9, a disregarded single-member LLC should give the owner's name and the owner's SSN or EIN, not the LLC's EIN. The LLC's own name goes on a separate line, but the taxpayer ID is the owner's.

The owner's number, not the LLC's. Write that on a sticky note for whoever does onboarding.

One narrow exception: for employment and certain excise taxes, the single-member LLC does use its own name and EIN. For the 1099 you're filing for a contractor, though, the income-tax rule is the one that applies, so you want the owner's TIN.

From W-9 to 1099-NEC, and the cost of skipping it

The W-9 isn't paperwork for its own sake. It's the input to a filing you're legally on the hook for.

At year end you file a 1099-NEC for each US contractor you paid $2,000 or more for services, due to the IRS and to the contractor on or before 31 January. The name and TIN on that 1099 come straight off the W-9. Without a usable W-9 the 1099 goes out wrong, and the penalty lands on you, not the contractor.

Those penalties scale with how late you are.

And it's two penalties, not one: section 6721 covers the return to the IRS, section 6722 the copy to the payee. A missing W-9 is how a $2,000 contractor quietly turns into a four-figure problem.

Paying contractors, including in stablecoins

Collecting the W-9 is about who the payee is and what you report. It says nothing about how the money actually moves, and increasingly that's crypto.

Paying a US contractor in USDT or USDC doesn't change any of this. You still collect the W-9, still file the 1099-NEC once you cross $2,000, and you value each payment at its fair market value in dollars on the pay date for the 1099. The form and the rail are separate questions. The payout side, batch payments to contractors and a record that ties each one back to the right TIN, is what VaultNow runs.

If you pay a mixed roster, some US contractors on a W-9, some foreign ones on a W-8, some in dollars and some in stablecoins, the hard part is keeping the payment, the amount, and the tax status lined up per person. That's the record VaultNow keeps on one ledger, so the year-end forms have what they need without a January reconstruction.

Frequently asked questions

What is a W-9 used for?

A W-9 gives a business the correct taxpayer identification number and certification of a person or company it pays, so the business can file the required IRS information return, usually a 1099-NEC. The payer keeps the W-9 on file rather than sending it to the IRS, and uses the details to prepare the year-end 1099.

Who has to fill out a W-9?

A US person or US entity that receives reportable payments fills out a W-9 at the request of the business paying them: contractors, freelancers, consultants, vendors, and most LLCs. Foreign individuals and foreign entities use a W-8 form instead, such as the W-8BEN, because they're certifying foreign status rather than a US taxpayer ID.

Does a W-9 expire?

No. The IRS doesn't set an expiration or renewal period for Form W-9. A business keeps the one on file and only requests a new one when the payee's information changes, such as a new legal name, a new entity type, or a corrected taxpayer ID. This is unlike the W-8BEN, which is valid for the year it's signed plus the next three calendar years.

What happens if a contractor won't provide a W-9?

If a payee doesn't give a correct TIN, the business is required to take 24% backup withholding from their payments and remit it to the IRS on Form 945. In practice that means withholding a quarter of each payment until a valid, certified W-9 is on file, which is why collecting it before the first payment is the simpler route.

How does a single-member LLC fill out a W-9?

A single-member LLC that's a disregarded entity for income tax gives the owner's name and the owner's SSN or EIN on the W-9, not the LLC's EIN. The LLC name can go on the business-name line, but the taxpayer ID reported for 1099 purposes is the owner's. An LLC that elected corporate treatment on Form 8832 uses its own EIN.

Do I need a W-9 to pay a contractor in crypto?

Yes. Paying a US contractor in stablecoins or other crypto doesn't change the information-reporting rules. You still collect a W-9, file a 1099-NEC once payments reach $2,000 for the year, and record each payment at its fair market value in dollars on the pay date. Only the payment rail changes, not the tax form.

This is general information, not tax or legal advice. The rules turn on your specific facts and change over time; confirm your situation with a qualified tax professional. Positions stated are as of 2026 and based on IRS guidance for Form W-9, Form 1099-NEC, and backup withholding.