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Introduction
“Think all gig workers are the same when it comes to tax forms? Think again.”
You’re a busy HR lead at a fast-growing marketing agency. You just onboarded a podcast editor, a freelance writer, and a virtual assistant all in one week. Now it’s tax season, and your inbox is full of pings from Finance asking for W-9s. But… you’re stuck. Who actually needs to fill one out? And what’s the real difference between a freelancer and a contractor, anyway?
Welcome to the confusion zone, where titles like freelancer, contractor, vendor, and consultant blur together like wet ink on a compliance form.
At GetW9, we’ve seen this scenario play out across startups, agencies, and even seasoned finance departments. This blog is designed to clear things up. Whether you’re part of a two-person team or managing vendor payments at scale, we’ll help you confidently answer the question: “Who needs to submit a W-9?”
And we’ll do it without the IRS-speak or legalese headache.
What is a W-9 Form and Why It Matters
Imagine this: You’ve just hired an independent graphic designer to help with a major campaign launch. She delivers stunning visuals, invoices you, and you pay her via ACH. Months go by and suddenly, January hits. Your accounting tool wants to generate a 1099-NEC, but you don’t have her tax info.
Cue the stress.
The W-9 form is your safety net. It’s the IRS’s way of making sure businesses collect and report the right taxpayer information from their U.S. based contractors and non-employees. Specifically, it asks for things like:
- Name and business entity type (individual, LLC, etc.)
- Taxpayer Identification Number (TIN) which could be a Social Security Number (SSN) or Employer Identification Number (EIN)
- Federal tax classification
Why does this matter? Because if you don’t file 1099s correctly or miss one entirely the IRS can slap you with penalties up to $280 per form. Multiply that by ten or twenty vendors, and you’re looking at a serious budget hit.
💡 Think of the W-9 as your contract’s DNA it gives your payments a legal identity, ensuring everyone plays by the rules come tax season.
And yet, many teams still treat it like a formality instead of a compliance checkpoint. That’s what we’re here to change.
Freelancer vs Contractor: The Core Difference
Let’s bust a myth right away:
“Freelancer” is a common label. “Contractor” is a tax classification.
That’s right. You might call your web designer a freelancer, your client-facing copywriter a consultant, or your podcast editor a creative partner. But to the IRS, they’re all treated under one umbrella independent contractors if they meet certain conditions.
So, what’s the difference?
Think of it like this:
“Freelancer” is how someone markets themselves.
“Contractor” is how the IRS sees them.
A freelancer might work with multiple clients, set their own hours, use their own tools, and invoice per project. That sounds like a contractor, right? In most cases, yes but not always.
Let’s break it down.
What defines a contractor?
According to the IRS and the U.S. Department of Labor, a contractor is someone you don’t directly control in other words:
- You don’t dictate how the work is done just the end result.
- They bring their own methods, tools, and schedules.
- They are not on your payroll no benefits, no taxes withheld.
In short: If you pay someone for a service and don’t control how they do it, they’re a contractor and they likely need to submit a W-9.
Example from the field:
At GetW9, one of our startup clients once hired a “freelance brand designer” through Upwork. The designer worked on multiple projects, used their own software, and billed through their own LLC. But here’s where it got tricky:
The HR team thought “Oh, they’re just a freelancer from a gig site no need for a W-9.”
That assumption cost them a late 1099 filing and a $560 IRS penalty.
Lesson learned? Label doesn’t matter structure does.
Questions to ask before collecting a W-9:
- Does the person invoice you or use a payment platform?
- Do they have an LLC or operate under their name?
- Are they performing a one-time job or ongoing services?
- Do they earn $600 or more from you in a calendar year?
If you answered “yes” to most of these, guess what? You need that W-9.
Watch out for edge cases:
Some freelancers operate through agencies or third-party marketplaces. In those cases:
- You don’t collect a W-9 from the individual.
- You collect it from the agency or platform (unless it’s a C-corp exempt from W-9).
We’ll dive deeper into those nuances in the next section.
Metaphor to remember:
“A freelancer is a flavor of contractor like how espresso is a type of coffee. The caffeine is the same, but how you brew it changes the label.”
Who Needs to Submit a W-9?
This is the million-dollar question — or at least the $600 one.
If you’ve ever Googled “who needs to fill out a W-9 form,” you’ve probably gotten a maze of IRS jargon in return. Let’s simplify it.
The golden rule:
Any U.S. based individual or business who is not your employee and earns $600 or more from you in a tax year should submit a W-9.
That includes:
- Sole proprietors and freelancers billing under their own name
- Contractors working through a personal brand or LLC
- Small agencies and consultants offering B2B services
- One-time vendors or creatives (photographers, video editors, etc.)
💡 If you’re issuing a 1099-NEC for the work they do, then you need a W-9 first.
But not everyone needs to send one…
Here’s who’s generally exempt:
- C-corporations (in most cases)
- S-corporations providing certain services
- Employees (they submit a W-4, not a W-9)
- Foreign contractors they usually submit W-8BEN instead
Think of the W-9 as your permission slip to file a 1099. No W-9? No accurate tax reporting and that’s risky territory.
Real-world scenario:
An operations lead at a SaaS company hired a podcast production team called “Soundstack Collective.” She assumed they were a registered business and didn’t collect a W-9.
Turns out? Soundstack was just three freelancers using a shared email address. At year-end, Finance had no way to issue their 1099s and had to spend weeks chasing down their TINs and addresses manually.
What went wrong? No W-9 collection process upfront.
What would’ve fixed it? A tool like GetW9 that automates W-9 requests before payments even start.
A note on LLCs:
- If the contractor runs an LLC taxed as a sole proprietor, you still need a W-9.
- If it’s taxed as a C-corp or S-corp, they may be exempt but they must indicate that on the form.
Never assume always collect a W-9 up front.
Common Mistakes to Avoid with W-9 Collection
Even well-meaning businesses trip up when it comes to tax compliance not because they don’t care, but because they don’t know where the traps are.
Let’s walk through the top W-9 missteps we see across fast-moving companies and how to sidestep them with clarity and confidence.
❌ Mistake 1: Treating a Contractor Like an Employee
This is a classic. You hire someone for ongoing help say, a part-time social media manager and start managing their hours, assigning tasks daily, and providing company tools.
At this point, the IRS may consider that person an employee, not a contractor. Which means a W-9 isn’t enough you’d need to be withholding taxes and issuing a W-2.
If you’re directing how the work gets done, not just what gets done, you’re crossing into employee territory.
❌ Mistake 2: Collecting the W-9 after payment
Picture this: It’s January, and your accounting team is scrambling to prepare 1099s. But half the vendors from the past year haven’t sent their W-9s. Now you’re chasing people who’ve already been paid and may not feel urgent about responding.
It’s like asking someone for a receipt after they’ve left the store frustrating and ineffective.
Always collect the W-9 before the first payment ideally during onboarding or contract signing.
❌ Mistake 3: Not Verifying TINs (Taxpayer Identification Numbers)
You might think the form is filled, box checked done. But if the TIN is invalid or mismatched (e.g., a name doesn’t match IRS records), your 1099 filing could be rejected. Worse, you may be required to withhold backup withholding at 24% and face penalties.
❌ Mistake 4: Forgetting About Data Security
W-9s contain sensitive info names, SSNs, EINs. Yet many businesses collect them via unsecured email, Google Forms, or shared spreadsheets.
That’s a massive liability, especially for companies handling dozens (or hundreds) of forms annually.
Best practice? Store W-9s in a secure, access-controlled system that meets IRS and data protection standards.
Real-life example:
A mid-sized digital agency we worked with stored W-9s in a shared Dropbox folder with open access. One day, a junior team member accidentally deleted 40+ files with no backup.
When the audit came around, the finance team had to re-collect everything… from scratch.
Moral of the story? Treat W-9s like confidential HR documents, not casual files.
How to Stay Compliant — The Smart Way
Now that we’ve covered who needs a W-9, who doesn’t, and where most people mess it up let’s talk solutions. Because W-9 collection doesn’t have to be a yearly headache.
In fact, with the right workflow, it can be as smooth and automatic as payroll.
Build a W-9 Workflow That Works
Here’s a simple, repeatable system you can build today:
Before You Pay Anyone:
- Add W-9 collection to your onboarding checklist
- Use a secure tool (not email) to request and receive W-9s
- Include a clause in your contracts: “Payment begins once W-9 is received”
While You Store Forms:
- Centralize all W-9s in one secure, access-controlled folder or dashboard
- Use naming conventions: “W9_[VendorName]_[Year].pdf”
- Limit access to Finance/Admin teams only
During Tax Season:
- Run a vendor list and cross-check who earned $600+
- Use stored W-9s to auto-fill 1099-NEC forms
- File everything with the IRS and send copies to vendors
Want to make this effortless? GetW9 automates every step from requests and reminders to secure storage and real-time tracking.
Real Client Workflow — In Action
A fractional CFO firm we worked with had over 40 clients, each hiring 5–10 independent contractors. That’s hundreds of W-9s per year all tracked manually in spreadsheets.
After switching to GetW9, they:
- Cut W-9 collection time by 80%
- Sent auto reminders that boosted response rates by 3x
- Eliminated late 1099s for the first time in 4 years
They didn’t just avoid penalties, they got peace of mind.
Final Thought
Think of W-9s like seat belts not fun, but absolutely necessary. When done right, they’re invisible protection for your business during tax time.
Conclusion
When it comes to tax forms, the difference between a freelancer and a contractor isn’t just semantics, it’s a matter of IRS compliance.
And that W-9 form? It’s your first line of defense.
Let’s recap:
- Freelancers are often contractors under IRS rules which means if you pay them $600 or more, you need a W-9.
- Collect W-9s before payment not after.
- Watch out for classification errors, invalid TINs, and data security gaps.
- Build a clear W-9 workflow and automate it wherever possible.
Whether you’re managing a dozen vendors or hundreds of independent creatives, GetW9 makes staying compliant friction free with secure forms, reminders, storage, and even audit readiness built in.
Don’t wait for January panic. Start clean today.
