CPA coordination & tax-ready books1099 Tracking for Contractors: Collect the W-9 Before You Pay

Every January, a certain kind of email goes out from small businesses across the country. "Hi! Hope you're well! Quick favor, could you send over a W-9?"

It's sent to a drywall sub you paid in April. Or a freelance designer you worked with once in June and haven't heard from since. Some reply in an hour. Some reply in three weeks. Some have changed their email address, their business name and, as far as you can tell, their entire identity.

There's a simpler way, and it fits in one rule: collect the W-9 before you pay. Here's how to set up 1099 tracking for contractors so January becomes a report you run in ten minutes.

What is a W-9, and why get it first?

Form W-9 is the IRS form a contractor fills out to give you their legal name, business name, tax classification (sole proprietor, LLC, corporation and so on) and taxpayer identification number (an SSN or EIN). You don't send it to the IRS. You keep it on file.

You need that information at year-end to determine whether a 1099 is required and to fill it out correctly. Before the first payment is the moment you have the most pull. After you've paid, getting paperwork back is a favor. Before you pay, it's part of onboarding.

If a contractor won't give you a tax ID, ask your CPA what to do before you pay them. The easier path is to never be in that spot.

W-9 collection: a simple onboarding rule

Make it a policy, written down:

1. No vendor gets set up in the bill-pay system without a W-9 on file.
2. No first payment goes out until the W-9 is received.
3. The W-9 gets saved in one place, named consistently (for example, "W9 - Vendor Name - 2026").
4. If a vendor's name, address or business type changes, ask for a new W-9.

This fits naturally into accounts payable, where vendors get set up and bills get approved. If your bill-paying process is still a bit freestyle, our guide to accounts payable for small business covers how to set it up so payments don't go out twice (or without paperwork).

How 1099 tracking for contractors works in QuickBooks Online

If you want to track 1099 vendors in QuickBooks, the setup has two parts.

First, on each contractor's vendor profile, turn on the option to track payments for 1099 and enter their tax ID and business details from the W-9.

Second, when you prepare 1099s at year-end, QuickBooks asks you to map expense accounts to the right 1099 boxes. If you code contractor payments to a consistent set of accounts during the year, like "Subcontractors" or "Contract Labor," that mapping is quick.

The one detail people miss: record how you paid. Your CPA treats check and bank-transfer payments differently from card and payment-app payments, so every contractor payment needs the right payment method in QuickBooks. If it isn't recorded, the year-end totals will be wrong.

A worked example: one remodeling company, five contractors

Imagine you run a hypothetical home remodeling company. During the year you paid:

1. A framing crew run by a sole proprietor: $46,000 by check.
2. An electrician whose business is an LLC taxed as a sole proprietorship: $21,500 by ACH.
3. A plumbing company that's an S corporation: $18,200 by check.
4. A tile setter: $7,800, half by ACH and half by credit card.
5. A designer: $1,600 by ACH.

With W-9s on file and payment methods recorded, your year-end list practically writes itself. The framing crew and the electrician are likely 1099 recipients. The plumbing company checked "S corporation" on its W-9, so note that on the list. For the tile setter, the list shows the ACH half ($3,900) and the card half separately. The designer's total is small, so flag it for the CPA. Your CPA decides who gets a 1099; your list just has to be complete and correct.

Your job is to have accurate data. Your CPA (or the filing service they recommend) makes the final calls on who gets a 1099 and files them.

The year-end 1099 checklist

Your CPA will want this list early in January, which is not a lot of runway after the holidays. So:

1. In November, run a report of payments to vendors flagged for 1099 tracking.
2. Look for contractors who were paid but not flagged. They hide in "Repairs," "Professional Fees" and "Miscellaneous."
3. Confirm every flagged vendor has a W-9 on file.
4. Confirm payment methods are recorded correctly, so card payments are excluded.
5. Send your CPA the list with totals by vendor in early January.

The 1099 list is one item on a longer year-end list; see what does my CPA need from me for the whole set.

Why construction and trades feel this most

Construction and trades businesses lean heavily on subcontractors, so 1099 volume adds up fast. The same subcontractor costs also need to land on the right job for job costing for contractors to tell you which jobs make money. Coding subcontractor bills to the right account and the right job at the moment they're entered handles both.

At ABFI, vendor setup and W-9 collection are part of bookkeeping and payroll, and the year-end contractor list is part of the package we hand to the client's CPA through CPA coordination. We don't file 1099s or give tax advice; we make sure the data behind them is right.