Contractor Paperwork SOP: Get the W-9 Before You Pay and File the 1099 in January
This is a Small Business SOP: a free, do-this-today standard operating procedure pulled from a real operator on the Unscripted Small Business podcast. This one comes from Maya Weinreb of Solvency Now Bookkeeping, who has been doing bookkeeping since straight out of high school, more than 20 years, and whose team now keeps the books for over 150 companies.
If you pay freelancers, helpers or other small businesses, you have a paperwork job most owners don’t notice until January. This SOP is that job, start to finish: who counts, the W-9 before the first payment, how you paid, the running total, the bank reconcile and the January filing. Run it this week, before the next invoice comes in.
The Play: One Line
Get a W-9 from every possible contractor before the first payment, log how you paid them, keep records that reconcile to your bank, and send the 1099s on time in January.
Contractor trouble starts before the first payment
Maya’s rule for staying out of trouble with the IRS is a cleaned-up version of something her dad taught her: “If you want to get out of trouble, don’t get in trouble in the first place.” For contractors, that moment is the first payment. If you get the form and log the payment then, January is a filing job. If you don’t, January is a hunt.
She sees both sides of it. Missed 1099s are one of the messes new clients bring her, and the rules shift: she said the 1099 threshold just changed this year, and that “they also are being more strict about records and record keeping” and about non-filing penalties. Her mission statement for the company is “complete and perfect financial records for the business owner’s peace of mind.” This SOP is the contractor slice of that.
Read this first: Maya is a bookkeeper, and these are her rules of thumb as she gave them on the show. They are not tax advice for your business. Your situation, your state and the current-year numbers matter, so check them with your CPA or tax professional before you file. On the bigger tax calls, Maya sends owners the same way, telling them to “talk to their CPA or tax planner or tax professional first to see the best way.”
The numbers behind the play
All four come from Maya Weinreb on the episode.
150+
companies Maya’s team keeps the books for
20+ yrs
Maya has been doing bookkeeping, since straight out of high school
$600
the 1099 threshold for decades, as Maya described it
$2,000
the new threshold this year, in Maya’s words, indexed to inflation
The threshold figures are Maya’s, as she said them on the show. Confirm the number for your filing year with your CPA or tax professional.
The 8-step contractor paperwork routine
1
Who counts
Assume more people count as contractors than you think
Before you pay anyone for a service, ask whether they could be a contractor for tax purposes. The way Maya described the rule, you 1099 anybody who provided a service, isn’t a corporation, and got paid more than the threshold in the year. Her warning: “There are many more people who are a potential contractor than what most business owners think of a contractor.” The one-off designer, the person who fixed the website, the helper you paid for a weekend. Put them all on the list.
2
Before you pay
Get the W-9 before the first payment
Make it a hard rule: no W-9, no payment. Ask for it when you agree on the work, not in December when you’re chasing people who stopped answering. Maya’s version: “Make sure you get them to fill out a W9 before you pay them so you can send them a 1099 in January.” Save the form where you keep the rest of your books, with the date you got it.
3
How you paid
Write down how you paid each one
The payment method changes the paperwork, so log it on every payment. Maya’s examples: “If you pay someone as a contractor, you pay them with a credit card, you don’t file a 1099.” And with PayPal: “If you pay them through PayPal friends and family, you do have to file a 1099, but if you pay them PayPal business, you don’t.” Checks and bank transfers go on the log too. She’s the first to say “certain ones get complicated”, which is why her answer is “you need a bookkeeper that’s going to stay on top of all that.”
4
The threshold
Keep a running total per contractor
Add up what each contractor has been paid this year, by method, so you can see who crosses the line. Maya said the number moved this year: it was $600 for decades, and “this year it just changed, so now it’s $2,000.” She added that it’s “supposed to be indexed to inflation”, so it will keep moving. Check the current figure with your CPA or tax professional each year instead of carrying last year’s number in your head.
5
Records
Reconcile to your bank every month
Match every contractor payment to a line on a bank or card statement. When the forms don’t line up with what you think you paid or earned, Maya’s answer starts here: “First you have to have really good records.” Good records mean “you have the backup” and “it reconciles to your bank accounts and it’s all written.” A monthly reconcile is ten minutes. Rebuilding a year of payments in January is a weekend.
6
Deadline
Put 1099s on the calendar for January
Block the time now: pull the contractor log in early January, confirm who crossed the threshold, and send the 1099s. On late or missing filings Maya didn’t mince words: “It’s really important to file those on time.” Her team’s own write-up on 1099 due dates is a good place to check the deadline for the year you’re filing.
7
Your bookkeeper
Ask whoever does your books if 1099s are on their list
One of the most common messes Maya cleans up is a bookkeeper who never filed them: “They didn’t get 1099s filed at all because the bookkeeper didn’t tell them.” Sometimes it wasn’t in the scope the owner paid for. A good bookkeeper raises it anyway, in Maya’s words: “Hey, you’re not paying me for 1099s, but 1099s are coming up due. Would you like any help on that or do you have it under control?” If nobody has asked you that by November, you ask them.
8
If a letter comes
Keep the file ready for a notice
Maya’s observation from her tax and accounting groups is that the IRS is using AI and sending more notices and penalties than before, and that “some of them are wrong and taking forever to dispute.” Your W-9s, your payment log and your reconciled statements are the answer to that letter. Keep them together, by year, so you can respond in an afternoon.
A contractor log you can copy today
One row per contractor. A spreadsheet is fine. Fill it in on the day you pay, not at year end.
🌐 Solvency Now Bookkeeping, bookkeeping for small businesses across the US, led by CEO Maya Weinreb
Maya’s team can hand a client to another bookkeeper because everything is written down per client. If you want the same thing for your own routines, the Simple Systems SOP shows how to write processes people follow. And before you paste a bank export or a contractor list into an AI tool, run the AI Paste Audit SOP. Maya uses AI all day, but not on client books, because of the security involved.
