Contractor onboarding
Contractor onboarding checklist
A contractor relationship starts with a payment and ends with a 1099, and the records collected at the start decide how easy the end is. This checklist covers what to collect before the first payment: the W-9, the contract, the insurance certificate, the payment terms and the worker classification review. It also covers the year-end records that make the 1099 filing clean.
Who sends itSent by the firm to a business client that is about to start paying a contractor, freelancer or consultant, before the first invoice is approved.
0 of 22 ticked
01Before the first payment
02Worker classification
03Payment and invoice process
04Tax reporting
05Records and renewals
What firms get wrong
- Paying the first invoice before the W-9 arrives, which turns a simple request into a year-end chase.
- Treating a contractor as an employee for control purposes but as a contractor on the contract.
- Keeping the W-9 in an email inbox instead of a secure contractor file.
- Missing the state 1099 filing requirement because the federal threshold was not crossed.
- Forgetting to ask for a new W-9 when the contractor changes entity type or address.
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Questions about this checklist
When should a business collect a W-9 from a contractor?
Before the first payment. The contractor is easiest to reach at the start, and the business needs the tax ID before it can prepare the 1099.
What is the 1099 threshold for a contractor in 2026?
For payments made in 2026, the threshold for Form 1099-NEC is $2,000 per payee for the year, up from $600 for earlier payments. Some payments keep their own rules, so check the current IRS instructions.
How can a business tell a contractor from an employee?
The answer depends on the control the business has over the work, the financial arrangement and the written agreement. The IRS and the states use different tests, and a worker who looks like a contractor on paper can still be an employee.
Does a contractor need to provide insurance?
It depends on the contract and the risk. A business can require general liability or professional liability insurance, and should keep the certificate on file with the expiration date.
What if the contractor will not provide a W-9?
Keep a record of each request and tell the firm before the next payment. Without a tax ID, the business may need to withhold backup tax, and the 1099 may be filed with a missing TIN.
Sources
- IRS: About Form W-9
- IRS: Am I required to file a Form 1099 or other information return
- IRS: About Form 1099-NEC
Checked November 3, 2026. Tax rules, forms and thresholds change; confirm them with the IRS or your tax software before relying on them.
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