This guide explains what a W-9 form is, why you need it from your vendors, and how to identify 1099 vendors to ensure your business stays compliant with IRS regulations.
It contains the following sections:
What is a W-9 form?
A W-9 form is an Internal Revenue Service (IRS) tax form that provides a vendor's Taxpayer Identification Number (TIN) to you when you pay them. The form is used to capture the following information:
- Used to collect accurate tax information from your independent contractor and freelancer vendors.
- Contains your vendor's legal name, business name, and tax classification.
- This information helps you report payments made to vendors to the IRS.
We recommend you secure a signed W-9 form from your freelancers and contractors before issuing their first payment.
To learn more about requesting W-9 forms from your vendors, please see the following guide.
Do you already have a W-9 form from your vendor? To find out how to upload a completed W-9 form, please see this guide for instructions.
Suppose you have paid a 1099 vendor less than the IRS reporting threshold through Gusto Bill Pay (for the 2025 tax year, the threshold is $600, and for the 2026 tax year, it will be $2,000), but also paid them an additional amount outside of Gusto Bill Pay for a combined total that meets or exceeds the threshold. In this case, you must still request a W-9 form from them. For more information on handling these vendors, please see the following guide.
What is a 1099 vendor?
A 1099 vendor is a self-employed individual or business that provides services to another company. Unlike employees, these partners:
- Are responsible for paying their own self-employment taxes.
- Work on a project-by-project basis.
- Do not have taxes withheld from their payments by your business.
Can I use Gusto Bill Pay to pay them?
Yes! 1099 vendors are vital to growing your business. Gusto Bill Pay is the perfect solution to pay them quickly and easily.
Learn more about paying your vendors here.
To comply with IRS regulations*, by January 31st of every year, you must file a 1099 form. This report includes any vendor who received payments from you at or above the IRS reporting threshold in the previous year. For the 2025 tax year, the threshold is $600, and for the 2026 tax year, it will be $2,000. Filing this report requires you to have a W-9 form from each one of them. To learn more about e-filing a 1099 form, please see the following.
*Please see the IRS website for further information.
Understanding 1099 forms
1099 forms are IRS documents that report various types of income outside of standard wages. These forms are filed with the IRS each tax year, and copies are sent to vendors.
Who receives a 1099?
- Independent contractors
- Freelancers
- Consultants
- Self-employed professionals, etc.
When is a 1099 Issued?
You must issue a 1099 form if you paid an independent vendor or 1099 vendor an amount that meets or exceeds the IRS reporting threshold. For the 2025 tax year, the threshold is $600, and for the 2026 tax year, it will be $2,000.
Types of 1099 forms
- 1099-NEC: For reporting non-employee compensation*
- 1099-MISC: For miscellaneous income like rent or royalties*
*Please see the IRS website for further clarification.
Best practices for vendor payments
1 - Collect the W-9 early: Make it a rule to receive the form before the first payment is sent.
2 - Verify the TIN: Ensure the name on the form matches the tax ID provided.
3 - Keep digital copies: Store completed W-9s within your Gusto Bill Pay vendor profiles for quick access.