W-9 vs. 1099 for California Contractors: What Every CSLB License Holder Needs to Know
As a licensed contractor in California, understanding the difference between a W-9 and a 1099 form is essential for IRS and California FTB compliance. Misclassifying workers or failing to file the right forms can cost you thousands in penalties.
Call Bookkeeping Champs at (818) 679-4451 for expert contractor tax guidance across Los Angeles, Ventura County, and Kern County.
What Is a W-9 Form?
The W-9 (Request for Taxpayer Identification Number and Certification) is the form you give to subcontractors before you pay them. It collects their Tax ID so you can issue them a 1099 at year-end if you paid them $600 or more. Collect it before the first payment — not in January.
What Is a 1099 Form?
The 1099-NEC (Nonemployee Compensation) is the form you send to subcontractors at year-end, reporting what you paid them. You must file with both the IRS and the California FTB for any subcontractor paid $600 or more during the year. California has stricter reporting requirements than federal law.
California-Specific Requirements for Contractors
California AB 5 Classification
California AB 5 makes it harder to classify workers as independent contractors than federal law. Under the ABC test, misclassification leads to unpaid payroll taxes, EDD penalties, and back wages. Many “subcontractors” in construction don’t pass this test.
California DE-542 Report
California requires reporting independent contractors to the EDD within 20 days of making payments totaling $600 or entering a contract. Penalty: $24 per unreported contractor — plus years of back filings during audits.
California FTB 1099 Filing
California requires filing 1099-NEC copies directly with the FTB — not just the IRS. This is often overlooked by contractors using national bookkeeping services unfamiliar with California requirements.
Common Mistakes California Contractors Make
- Not collecting W-9s before the first payment
- Missing the January 31 filing deadline
- Forgetting California DE-542 reporting
- Misclassifying employees as independent contractors under AB 5
- Not filing with the California FTB
- Using 1099-MISC instead of 1099-NEC
Frequently Asked Questions
Do I need to send a 1099 to an incorporated contractor?
Generally no — corporations (Inc. or Ltd.) are exempt. LLCs taxed as partnerships or sole proprietors still require 1099s. Always get a W-9 first to confirm their entity type.
What happens if I don’t file 1099s in California?
Federal penalties range from $60 to $310 per missing 1099. California adds its own penalties. Intentional failure: $630 per form with no maximum.
Can Bookkeeping Champs handle our 1099s?
Absolutely. We handle W-9 collection tracking, 1099-NEC preparation, IRS e-filing, California FTB filing, and DE-542 compliance for contractors across LA County, Ventura County, and Kern County. Call (818) 679-4451.
Bookkeeping Champs specializes exclusively in CSLB-licensed contractors. Serving Los Angeles, San Fernando Valley, Ventura County, and Kern County. Call (818) 679-4451 or schedule a free consultation.