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Introduction
Picture this: It’s January 25th. Your bookkeeper’s face is pale. You’ve got coffee in one hand, a spreadsheet in the other, and one big problem: five contractors you paid last year still haven’t sent in their W-9s. One of them is traveling abroad. Another has changed their email. The rest? Radio silence.
Now, the IRS deadline is a week away. Your team is chasing signatures instead of closing the books. And worst of all? You paid these people months ago, so they have no incentive to respond quickly.
If this sounds familiar, you’re not alone.
Many small businesses treat W-9s as a January chore. But by then, it’s often too late to gather forms without added stress, risk, or cost. In fact, collecting W-9s late is one of the most expensive “minor” oversights you can make not just in terms of IRS penalties, but in lost time, strained vendor relationships, and operational drag.
At GetW9, we’ve worked with dozens of businesses who swore they had a “system” until that system collapsed under tax season pressure.
So let’s unpack exactly why collecting W-9s late is such a big deal, and what you can do to fix it (without spreadsheets or stress).
Why Timing Matters with W-9s
Let me share a true story. One of our customers, a mid-sized creative agency, hired a dozen contractors for various client projects throughout the year. But no one on the team had time to request W-9s up front. “We’ll deal with it later,” they said.
When January hit, it was chaos. One videographer had moved, two designers were unreachable, and one contractor outright refused to send the form unless he was paid again for his time.
Sound extreme? It’s not. We hear stories like this every tax season.
Why this happens:
- Once you’ve paid a contractor, your leverage is gone.
- Contractors are busy and may not prioritize your W-9 request.
- People move, change emails, or disappear altogether.
- Your team ends up doing detective work instead of accounting.
Collecting W-9s early, ideally before the first payment is issued, avoids all of this. It’s the same reason HR departments require W-4s from new employees before issuing paychecks. It’s just good sense.
Think of it like boarding a plane: you wouldn’t wait until landing to ask for someone’s ID.
Make W-9 collection part of your onboarding workflow. If you’re using GetW9, you can automate this with a branded request link, secure upload, and automatic reminders. No more email chasing. No more missing forms.
IRS Penalties and Compliance Risks
Now let’s talk dollars and consequences.
Collecting W-9s late or not at all doesn’t just slow you down. It can directly impact your bottom line through IRS penalties and compliance issues. And unfortunately, ignorance isn’t a valid excuse in the eyes of the IRS.
What’s at stake?
- Penalty per incorrect 1099: Up to $310 per form
- Penalty for failure to file on time: Up to $630 per return in cases of intentional disregard
- Backup withholding: If you don’t have a W-9 on file, you’re required to withhold 24% of all future payments to that contractor and remit it to the IRS
These aren’t hypothetical numbers. We’ve seen small businesses face thousands of dollars in fines simply because they didn’t have complete W-9s in time.
Why it gets messy:
- Incorrect TINs (Taxpayer Identification Numbers) trigger automatic alerts
- IRS B Notices require you to fix errors and notify vendors
- Late filings often result in extension requests, which signal disorganization
And if you’re ever audited? Missing or incorrect forms will be one of the first red flags they look for.
Don’t gamble with compliance
When it comes to W-9s, it’s not just about checking a box. It’s about protecting your business from financial and legal consequences. Collecting them early and verifying the data puts you in control and keeps the IRS out of your hair.
Lost Time = Lost Money
If you’ve ever watched your team scramble to collect W-9s in January, you know the time cost is real. But it’s not just about filling out forms it’s about the hours (sometimes days) spent chasing, tracking, correcting, and re-filing. That’s time you’re not spending on things that grow your business.
Here’s what’s really happening:
- Admins are digging through email threads, Slack messages, and payment apps.
- Your finance lead is triple-checking TINs instead of closing the books.
- You miss opportunities to finalize accounts, run projections, or start Q1 strong.
It adds up fast:
- Time delay leads to missed deadlines and errors
- Overtime or extra hours may be needed to clean up the backlog
- Frustration grows across departments
Wasted time = wasted trust
It’s not just your internal team. Contractors can lose trust in your process too. Late requests, multiple follow-ups, and back-and-forths send the message that your operations aren’t tight, which could affect future working relationships.
With GetW9, you can collect, verify, and securely store W-9s the moment you onboard a new contractor, freeing your team to focus on revenue, not red tape.
The Right Time to Collect a W-9 is BEFORE Payment
Here’s the simple truth: if you’re asking for W-9s after paying someone, you’re already behind.
The ideal moment to request a W-9 is during onboarding, right alongside payment terms, bank details, or NDAs. It should be baked into your vendor or contractor workflow so that no invoice is approved without it.
Why this works:
- You have leverage before money changes hands
- Contractors expect onboarding paperwork it’s not a surprise
- You ensure IRS compliance from day one
One GetW9 client embedded a W-9 collection link directly into their onboarding form using our platform. Result? A 95% W-9 collection rate before the first payment was ever issued.
How to do it right:
- Add W-9 collection to your vendor setup checklist
- Communicate early — “We’ll need your W-9 to activate payment.”
- Use a tool like GetW9 to automate the request and secure upload process
This one small change saves hours and builds a cleaner, more professional experience for everyone involved.
When contractors know your payment process includes W-9 collection as a standard step, they respond faster and with fewer questions.
Automation Is the Secret to Stress-Free W-9s
Let’s face it: you don’t want your team spending their time chasing paperwork. That’s what automation is for.
With the right tool, W-9 collection can become a background task, one that runs smoothly without human intervention. No follow-ups. No folders. No last-minute panic.
What automation does for you:
- Sends W-9 requests instantly after contractor onboarding
- Provides a secure place for contractors to upload forms
- Triggers automated reminders if someone forgets
- Verifies TINs in real time to prevent IRS flags
- Stores everything in one organized, searchable dashboard
Think long-term
Tax time shouldn’t feel like a fire drill. With automation, you can build a consistent, repeatable process that scales with your business.
No more hunting for forms. No more rushing deadlines. Just compliance, built-in.
If your business works with even 5+ contractors per year, automation pays for itself in saved time, reduced errors, and peace of mind.
Conclusion: Make W-9s the Easiest Part of Tax Season
Let’s be real — no one wakes up excited to manage tax forms. But that doesn’t mean W-9s have to be a headache.
The cost of collecting W-9s late goes far beyond penalties. It drains your time, stresses your team, and introduces avoidable risk into your operations. But with a simple shift, requesting forms before payment and automating the follow-up, you can take control of the process and stay compliant without chaos.
If you’ve ever thought, “There must be a better way to handle this,” you’re not alone. Plenty of growing teams have already traded the stress of spreadsheets for smarter solutions, and they’re not looking back. Maybe it’s time to see what that feels like.
