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Accounts payable · Tax compliance

AP software for W-9 collection and 1099 vendor tracking

AP software for 1099 compliance should collect a W-9 from each vendor before payment, store the tax ID securely, flag which vendors are 1099-reportable, and track what you pay them during the year. For payments made in 2026, the IRS reporting threshold for Form 1099-NEC is $2,000, and forms are due to recipients and the IRS by January 31.

Last updated · Aequo AP editorial team

The W-9 and 1099 rules AP needs to know

Collect a W-9 to get each vendor’s TIN and tax classification, then report qualifying payments on Form 1099-NEC or 1099-MISC once they reach the IRS threshold for the year.

Selected 1099 reporting thresholds for payments made in 2026
Payment typeForm and boxReport when payments reach
Nonemployee compensation (contractors, freelancers)1099-NEC, box 1$2,000
Rents1099-MISC, box 1$2,000
Other income1099-MISC, box 3$2,000
Royalties1099-MISC, box 2$10
Gross proceeds paid to an attorney1099-MISC, box 10$600
Source: IRS Instructions for Forms 1099-MISC and 1099-NEC, December 2026 revision. The $2,000 thresholds apply to payments made after December 31, 2025 and may be adjusted for inflation from 2027. Check the current instructions each year.
  • Form W-9 is how a vendor gives you its correct TIN (IRS). The current revision is dated March 2024.
  • Corporations, including LLCs taxed as C or S corporations, are generally not reported on 1099-NEC. Payments for legal services are the main exception.
  • Deadlines: 1099-NEC must be furnished to the recipient and filed with the IRS by January 31.
  • Missing TINs: if a vendor does not provide a correct TIN, backup withholding at 24% may apply (IRS).

Step-by-step: W-9 collection and 1099 tracking in AP

Get the W-9 at onboarding, classify the vendor once, track payments all year, and review the list before January.

  1. 1

    Step 1

    Request a Form W-9 from every new US vendor before the first payment, and do not set the vendor up as payable until it is back.
  2. 2

    Step 2

    Record the vendor’s legal name, tax classification and taxpayer identification number (TIN) from the W-9, and store the TIN securely.
  3. 3

    Step 3

    Flag each vendor as 1099-reportable or not, based on its tax classification and what you pay it for (services, rent, legal fees and so on).
  4. 4

    Step 4

    Hold or escalate invoices from reportable vendors with no W-9 on file, and follow up on expired or incomplete forms.
  5. 5

    Step 5

    Track payments to reportable vendors through the year by form type and box, using the date paid, not the invoice date.
  6. 6

    Step 6

    At year-end, compare each vendor’s total with the current IRS threshold, review the list, then file and furnish the forms by the deadline.

Before filing, payers can check name and TIN combinations with the IRS's TIN Matching service, available through IRS e-Services to payers that file information returns.

Worked example: which vendors get a 1099-NEC

In this example, two of four service vendors receive a 1099-NEC for 2026: one falls below the threshold and one is an S corporation.

Example: 2026 payments for services to four vendors
VendorTax classification on W-9Paid in 20261099-NEC?
Freelance designer (sole proprietor)Individual$7,800Yes
IT support LLC (taxed as a partnership)LLC, partnership$12,400Yes
Office cleaner (sole proprietor)Individual$1,650No: below $2,000
Consulting firm (S corporation)S corporation$26,000No: corporation (not legal services)
Illustrative vendors and amounts. Under the $600 threshold that applied to 2025 payments, the office cleaner would also have received a 1099-NEC.

What to look for in AP software for W-9s and 1099s

Check four things: how W-9s are collected, how tax IDs are protected, whether missing W-9s block or flag payment, and what the software does at year-end.

CapabilityWhy it matters
Online W-9 request and submissionVendors submit their TIN through a secure link instead of emailing a PDF that sits in an inbox.
W-9 status per vendorShows which vendors are requested, received or expired, so follow-up is a list, not a search.
Encrypted, masked tax IDsTINs and Social Security numbers are sensitive personal data. Only a few people should ever see them in full.
Warnings at approval or paymentA missing W-9 is caught before the money goes out, when the vendor still has a reason to respond.
Year-end 1099 preparationTotals by vendor and form type, reviewed against payments made in the calendar year.
E-filing and recipient deliverySome tools file with the IRS and send copies; others hand off to your accounting system or a filing provider.

Common mistakes

Most 1099 problems start at vendor onboarding, long before January.

  • Paying before the W-9 arrives. After the first payment, vendors have little reason to send it.
  • Emailing W-9 PDFs. Unencrypted forms with Social Security numbers end up in inboxes and shared drives.
  • Using invoice dates instead of payment dates. 1099s report payments made in the calendar year.
  • Old thresholds in spreadsheets. The NEC and most MISC thresholds moved from $600 to $2,000 for 2026 payments.
  • Reporting card payments. Payments made by credit card or through a third-party payment network are generally reported by the payment processor on Form 1099-K, not by you on 1099-NEC. Check the IRS instructions.

How Aequo AP handles W-9s and 1099 vendors

Aequo AP tracks W-9 status for each vendor, requests W-9s by email with a secure link to submit online, encrypts tax IDs at rest, warns approvers when a 1099 vendor has no W-9, and prepares draft 1099 records for review.

  • W-9 requests. One click emails the vendor a secure link to submit its W-9 details online. When the vendor submits, the W-9 status changes to received automatically.
  • Status tracking. Each vendor shows a W-9 status (not requested, requested, received or expired) and whether it is 1099-eligible.
  • Encrypted tax IDs. Tax IDs are encrypted at rest and shown masked to the last four digits. Seeing the full number requires an owner or admin permission, and every reveal is logged.
  • Approval warnings. When an invoice from a 1099-eligible vendor is up for approval and the vendor has no W-9, or an expired one, the approval screen says so.
  • Draft 1099 records. For a tax year, Aequo AP creates draft 1099-NEC or 1099-MISC records for eligible vendors with their invoice totals, which you review, mark ready and mark filed.

Aequo AP does not e-file 1099s with the IRS or send copies to vendors. Check the draft totals against payments made in the calendar year and the current threshold, then file through your accounting system or a filing provider.

Frequently asked questions

What is the 1099-NEC threshold for 2026?

For payments made in 2026, you report nonemployee compensation of $2,000 or more on Form 1099-NEC. The IRS instructions say the $2,000 threshold may be adjusted for inflation beginning in calendar year 2027. Payments made in 2025 and earlier used the $600 threshold.

When are 1099-NEC forms due?

According to the IRS instructions, you must furnish Form 1099-NEC to the recipient and file it with the IRS by January 31 of the year after the payments were made.

Do I need a W-9 from every vendor?

It is good practice to collect one from every US vendor before the first payment. The W-9 gives you the vendor’s correct TIN and tax classification, which tells you whether the vendor is reportable, and protects you if the IRS later questions a missing TIN.

Do I send a 1099 to a corporation?

Generally no: payments to corporations, including LLCs taxed as C or S corporations, are not reported on Form 1099-NEC. The main exceptions are payments for legal services, which are reportable even when paid to a corporation, and medical and health care payments on Form 1099-MISC.

What happens if a vendor will not provide a W-9?

If a payee does not give you a correct TIN, you may have to begin backup withholding, which the IRS sets at 24% of reportable payments. Many companies simply hold payment until a completed W-9 is received.

Can AP software file 1099s for me?

Some can and some cannot. Check whether the software only tracks W-9s and 1099 vendors, prepares draft forms, or actually e-files with the IRS and delivers copies to recipients. Aequo AP tracks W-9s and prepares draft 1099 records; you file through your accounting system or a filing provider.

Automate matching, approvals and exception handling

Aequo AP captures invoices, matches them to purchase orders and receipts, routes approvals and flags duplicates and exceptions, then syncs with QuickBooks Online, Xero, FreshBooks or Zoho Books.

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Related guides and tools

Sources

Checked on October 23, 2026. Vendor capabilities and prices change; confirm current details with each vendor.

  1. IRS, Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026) — $2,000 threshold for nonemployee compensation, rents and other income for 2026 payments; $600 for attorney gross proceeds; $10 royalties; January 31 due date; corporation exemption and exceptions
  2. IRS, About Form W-9 — purpose of Form W-9; current revision March 2024
  3. IRS, Backup withholding — current backup withholding rate of 24%
  4. IRS, Taxpayer Identification Number (TIN) Matching — name and TIN validation for payers before filing information returns