Table of contents
Published October 27, 2026.
Collect the W-9 at vendor setup
The best time to collect a W-9 is before the first check. Add it to the vendor onboarding packet and record the legal name, entity type, address, and taxpayer identification number. A file assembled in January from invoices and old emails is a reconstruction project.
Classify the vendor correctly
A corporation, an LLC taxed as a corporation, a partnership, and an individual are treated differently for reporting. Read the entity type on the W-9 rather than guessing from the name. When the form is incomplete, ask the vendor instead of selecting a default.
Separate goods from services
Payments for merchandise, rent, and some reimbursements are generally not reported the same way as payments for services. Code the invoice at entry so the annual report can exclude the right transactions. A single vendor category forces someone to re-read every invoice later.
Handle honoraria and stipends
A speaker honorarium may be reportable even when the amount is modest and the speaker is not a regular contractor. Record the recipient, the purpose, the date, and the tax form status. Do not assume that a nonprofit payee or a volunteer is exempt without checking.
Keep reimbursements distinct
A reimbursement of documented expenses is different from a fee for service. Require receipts and record the expense category. If the payment combines a fee and a reimbursement, split the lines so the reportable amount is clear.
Run a midyear vendor review
In July, list every vendor paid during the year, the total, the W-9 status, and the expected reporting category. Follow up on missing forms while there is still time to correct the record. This review also catches duplicate vendors and misspelled legal names.
Prepare the year-end file
Before the filing deadline, reconcile the payment totals to the ledger and the W-9 names to the forms. Keep the W-9, the payment detail, and the filed copy together. If a vendor disputes a form, the file should show how the total was calculated.
A combined payment example
A consultant invoices a five thousand dollar fee plus twelve hundred dollars of approved travel. The reimbursement is documented with receipts and coded as travel, while the fee is reportable service income. Combining them into one check is fine, but the vendor record must keep the split.
State and local requirements
Federal reporting is not the only obligation. Some states require their own information returns or withholding. Check the rules for the states where vendors work and where the organization operates, and record the conclusion with the date it was reviewed.
- W-9 on file
- Entity type
- Payment purpose code
- Reimbursement receipts
- Midyear review
- Filed copy