When hiring independent contractors, you’ll encounter two critical tax forms: the W-9 and the 1099. The core difference is simple: a Form W-9 is used to collect a contractor’s taxpayer information for your records, while a Form 1099 is used to report their annual earnings to the IRS. While related, understanding the W9 vs 1099 distinction is crucial for business compliance and avoiding headaches with the IRS.

This guide breaks down everything you need to know about the W9 vs 1099 process in simple terms, so you can handle your contractor paperwork with confidence.

What is a Form W-9?

A Form W-9, officially the “Request for Taxpayer Identification Number and Certification”, is a data collection tool. Think of it as an intake form. When you hire an independent contractor, you give them a blank W-9 to fill out.

The contractor provides their legal name, address, and Taxpayer Identification Number (TIN), which is either a Social Security Number (SSN) for an individual or an Employer Identification Number (EIN) for a business. By signing it, they certify that their information is correct.

Crucially, the W-9 is for your records only. You do not send it to the IRS. You simply keep it on file to have the necessary information for tax reporting later on.

What is a Form 1099?

A Form 1099 is an information return, which is a fancy way of saying it’s a report. Specifically, you use it to report to the IRS how much you paid a non employee during the tax year. There are many types of 1099s, but for contractor payments, you’ll most likely use Form 1099-NEC (Nonemployee Compensation).

Unlike the W-9, you, the business owner, are responsible for preparing the Form 1099. After the year ends, you send one copy to the contractor and another copy to the IRS. This ensures that the income you paid out is properly reported by the recipient on their own tax return.

The Core Difference: W9 vs 1099 Explained

The fundamental W9 vs 1099 difference comes down to who fills it out, its purpose, and where it goes. This W9 vs 1099 comparison highlights their distinct roles in the tax compliance workflow.

• Purpose: A W-9 collects taxpayer information for your records. A 1099 reports payment information to the IRS.
• Who Completes It: The contractor (payee) fills out the W-9. The business (payer) fills out the 1099.
• Submission: The W-9 stays with the business. The 1099 is filed with the IRS and a copy is sent to the contractor.
• Timing: A W-9 is filled out once at the beginning of a working relationship. A 1099 is issued annually for each year payments are made.

In short, the W9 vs 1099 relationship is simple: the W-9 is the input, and the 1099 is the output. You can’t properly create the output (1099) without first getting the input (W-9).

The Workflow: How W-9 and 1099 Work Together

Understanding the process from start to finish makes the W9 vs 1099 relationship clear.

Who Completes Each Form?

To recap:

• Form W-9: Completed by the independent contractor, freelancer, or vendor you are paying.
• Form 1099: Completed by the business or individual who made the payments.

The contractor provides their data on the W-9, and the company reports the payment totals on the 1099.

When to Request a W-9

The best practice is to request a completed Form W-9 from a contractor before you issue their first payment. This should be a standard part of your onboarding process. Getting this form upfront ensures you have all the necessary information long before the tax filing season, preventing a last minute scramble to track down a contractor’s TIN.

When to Issue a 1099

You issue a Form 1099 after the calendar year has ended. The information on the form summarizes all payments made to the contractor during that year. You don’t send a 1099 after each payment; it is a cumulative annual report.

Using the W-9 to Prepare the 1099

The W-9 is the direct source of information for the 1099. When you prepare a Form 1099-NEC, you will pull the contractor’s name, address, and TIN directly from the W-9 they provided. This ensures the information you report to the IRS matches the contractor’s official details, preventing mismatches that can trigger IRS notices. Without a W-9, accurately preparing a 1099 is nearly impossible. If you’re evaluating tools to simplify this, compare options in our guide to the best software for payroll.

Deep Dive into the Forms

Let’s look closer at the specific information involved.

What Information Does a W-9 Collect?

A completed Form W-9 contains the following key details:

• Legal Name (as shown on their tax return)
• Business Name (if different)
• Business Entity Type (e.g., sole proprietor, C Corporation, S Corporation, LLC)
• Mailing Address
• Taxpayer Identification Number (SSN or EIN)
• A signature certifying the information is correct and that they are not subject to backup withholding.

What Information Does a 1099 Report?

A Form 1099-NEC reports:

• Payer’s Information: Your business name, address, and TIN.
• Recipient’s Information: The contractor’s name, address, and TIN (from their W-9).
• Payment Amount: Box 1 shows the total nonemployee compensation paid for the year.
• Taxes Withheld: Box 4 reports any federal income tax withheld, which is usually only relevant for backup withholding.

The $600 Rule: Threshold for Issuing a 1099

You are generally required to issue a Form 1099-NEC if you paid a contractor $600 or more during the calendar year. This threshold is cumulative. Four separate payments of $200 to the same person total $800, which means a 1099 is required. If the total is less than $600, you are not obligated to file a 1099 for that person, though they are still required to report the income. Paying contractors outside the U.S.? The rules differ. See our global payroll processing complete guide.

Understanding Backup Withholding

Backup withholding is an IRS rule that requires you to withhold a flat 24% from a contractor’s payments and send it to the IRS. This is not optional and typically applies if the contractor fails to provide a TIN or provides an incorrect one. Requesting a W-9 upfront is the best way to avoid this. If a contractor refuses to provide a W-9, you must begin backup withholding immediately.

Compliance and Common Pitfalls

Mistakes with W9 vs 1099 compliance can be costly. Here is what you need to know to stay compliant.

Penalties for Getting it Wrong

• For Contractors: The main consequence for not providing a W-9 is having 24% of your pay withheld.
• For Businesses: Failing to file a required 1099 or filing it late can result in penalties from the IRS. These fines typically range from $60 to over $300 per form, depending on how late the filing is. If the IRS determines there was intentional disregard, the penalty can be $550 or more per form.

The 1099 Filing Deadline You Can’t Miss

The deadline to file Form 1099-NEC with the IRS and provide a copy to the contractor is January 31 of the year following the payment year. For example, payments made in 2025 must be reported by January 31, 2026. This is a firm deadline. If you need an easy way to file on time, see our guide to the best 1099 software for small business.

Common Mistakes to Avoid

Navigating the W9 vs 1099 rules means avoiding these common errors.

1. Waiting Until Year End to Collect W-9s: The biggest mistake is not getting a W-9 at the start. Chasing down contractors in January is stressful and inefficient.
2. Incorrect TIN/Name Combinations: Typos or using a nickname instead of a legal name can cause a mismatch with IRS records. Copy the information exactly as it appears on the W-9.
3. Using the Wrong Form: Since tax year 2020, nonemployee compensation is reported on Form 1099-NEC, not Form 1099-MISC. Using the wrong form can lead to filing issues.
4. Ignoring the $600 Threshold: Miscalculating totals and failing to issue a 1099 for someone you paid over $600 is a common and avoidable error.

Automating W-9 and 1099 Compliance

As your business grows and you scale your contractor hiring, managing contractor paperwork manually becomes a huge time sink and increases the risk of errors. This is where automation can be a lifesaver. Modern payroll and HR platforms can handle the entire W-9 and 1099 process for you.

For example, an all in one platform like Bolto can automate W-9 collection during contractor onboarding, store the information securely, track payments, and then automatically generate and e-file 1099s at the end of the year. This approach eliminates manual data entry, ensures deadlines are met, and keeps you compliant with just a few clicks. For startups and small businesses, automating this administrative burden frees up valuable time to focus on growth.

Frequently Asked Questions (FAQ) about W9 vs 1099

Is a W-9 the same as a 1099?

No. A W-9 is a request for information that the contractor fills out. A 1099 is a report of payments that the business fills out and sends to the IRS.

What happens if I don’t give a company a W-9?

The company is required by the IRS to start backup withholding, meaning they will hold back 24% of your payments and send that money to the IRS. You will receive less pay upfront.

Do employees fill out W-9 forms?

No. Employees fill out a Form W-4 for wage withholding and receive a Form W-2 at the end of the year. The W9 vs 1099 process is strictly for independent contractors and other non employee vendors. If you’re hiring full‑time employees abroad without opening entities, learn how an Employer of Record (EOR) works.

Does an LLC need to provide a W-9?

Yes, all business entities, including LLCs and corporations, should provide a W-9 when requested. However, whether they receive a 1099 depends on their tax classification. Most payments to C Corporations and S Corporations for services are exempt from 1099 reporting. A single member LLC is typically treated as a sole proprietor and would receive a 1099.

If I paid a contractor less than $600, do I need to do anything?

If the total payments for the year are under $600, you do not need to issue a Form 1099-NEC. However, it’s still a good idea to collect a W-9 from every contractor as a best practice, just in case their total payments end up exceeding the threshold.

If managing contractor compliance feels overwhelming, consider exploring a service that handles it for you. Platforms built for startups can make everything from onboarding to payments and tax filings seamless. Learn more about how you can automate your contractor management.