1099 reporting problems rarely start in January, they just show up then

Filing season just ended, and if it felt messy, delayed, or overly manual, that experience is worth noting. It shows you exactly where your process broke down.

Most 1099 issues do not start in January, that is simply when they become visible.

They usually begin earlier, when vendors are onboarded without a W-9, when teams use imprecise language like “1099 employee,” or when no one is clearly responsible for tracking reportable payments.

Now, looking to the year ahead, is the right time to fix that for a cleaner filing season next January.

Turn filing season lessons into operational fixes

If you want a cleaner 2026 filing season, focus on three fundamentals now, while this year’s gaps are still clear.

1. Fix your W-9 collection process.

A W-9 is collected from a vendor or contractor. It provides the legal name, tax classification, and taxpayer identification number required for reporting. Businesses keep this information on file and a 1099 comes later if reporting needs apply.

That sequence matters more than teams may realize.

If you had to chase W-9s in January, that was not a filing issue. It was an onboarding miss. The fix is straightforward. Require a completed W-9 before issuing the first payment. Not after.

2. Correct worker classification language and decisions.

Although we sometimes hear this, there is no such thing as a “1099 employee.” A worker is either an employee who is paid through payroll with taxes withheld and reported on a W-2, or an independent contractor who may receive a 1099-NEC. This does not come down to just semantics. When the language is unclear, the classification usually ends up unclear as well, which ultimately creates downstream issues across payroll, tax reporting, and compliance.

Now is the right time of year to review how those decisions are being made, before additional payments compound the problem.

3. Build a simple year-round tracking rhythm.

What makes filing season difficult is rarely the form itself. It is the scramble to reconstruct a year of activity.

Businesses that avoid that scramble tend to follow a few consistent practices. They collect W-9s before issuing payment. They classify workers at the start of the relationship. They track vendor payments throughout the year in a structured way, and they review reportable payments before deadlines are close. None of this is complex. But it does require ownership and consistency.

April is when individual taxpayers focus on income taxes. For businesses, it should be when you address the systems behind them.

If filing season felt reactive, the solution isn’t to tackle this earlier in January. It is to start evaluating how to operate differently now because 1099 outcomes are shaped by everyday processes, not last-minute effort.

For transparency, I am the General Manager for 1099 and W-9 Reporting at Avalara. This information is provided for general educational purposes and does not constitute tax advice.