Intro
Happy Tuesday, folks!
Welcome back to another edition of The Contractor Finance Playbook.
Today I’m talking about a topic that most business owners (and accountants) absolutely dread: collecting W-9s and 1099 filing.
Let’s face it. Nobody likes it, but we all have to do it whether we want to or not.
I’m going to give you some tips on how to do most of the legwork now, so come January, you or your accountant isn’t scrambling to get everything filed in time.
Plus, is it worth giving away free work for the sake of referrals? This is a real lead gen strategy that someone is trying out this fall. I’ll give my thoughts on it and a more practical way to approach it.
Now, let’s dive on in!
Deep dive: Your 1099 Prep Starts Now
Your 1099 Prep Starts Now
For accountants, January kicks off a season that most of us absolutely dread: 1099 filing season.
Seems like every year I talk to accountants and business owners who are still scrambling the last week of January, asking for W-9s so they can get 1099s filed on time.
Quick Refresher: Who gets a 1099?
If you paid an unincorporated independent contractor or subcontractor $2,000 or more, you generally need to send them a 1099-NEC.
A few things to note:
The threshold went up for 2026: The threshold for 2025 and prior was $600. Starting in 2026, that threshold has increased to $2,000.
Corporations are exempt: You generally don’t need to send a 1099 to a corporation. Their W-9 tells you how they’re classified so you don’t have to guess.
Credit card payments are exempt: Any payments made via credit or debit card are exempt from the $2,000 threshold. The card processor is responsible for reporting those amounts, not you.
The deadline to file is January 31st: The deadline to file is 1/31, which is a Sunday. Since the filing deadline falls on a Sunday, the actual deadline is February 1st.
The 1099 covers what you paid throughout the calendar year, and you can’t change that after the fact. For independent contractors and subs that you work with consistently, you should already have the W-9 on file, so everything should be good there unless something changes.
But for new subs or independent contractors, you can be proactive and collect the W-9 before year-end, so you or your accountant aren’t chasing them in January.
Pro Tip: Require the W-9 at onboarding and don’t send a payment until it’s received.
This is a trick I learned working in corporate. We required a W-9 on file with the vendor setup request and wouldn’t set up the vendor account until it was received.
It worked so well that I’ve carried this process into my own firm and am implementing it for all clients whose Bill Pay I handle. For contractors that I don’t have W-9s for, I use a platform that sends the blank form, and the contractor fills in the required fields electronically and submits. They usually comply with little to no pushback because they want to get paid. It takes all of five minutes, and I have a W-9 on file.
This makes it so much easier come January when it’s time to run the numbers and file.
And if your books are caught up, it makes this process a breeze.
Want More?
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Shoot me an email at [email protected] if you have any questions or requests for topics you would like me to write about. I’m all ears and I respond to all emails personally.
That’s all this week, folks!
‘Til next time, cheers!
Preston